[Federal Register Volume 89, Number 130 (Monday, July 8, 2024)]
[Rules and Regulations]
[Pages 56028-56156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12689]



[[Page 56027]]

Vol. 89

Monday,

No. 130

July 8, 2024

Part II





Consumer Financial Protection Bureau





-----------------------------------------------------------------------





12 CFR Part 1092





Registry of Nonbank Covered Persons Subject to Certain Agency and Court 
Orders; Final Rule

  Federal Register / Vol. 89 , No. 130 / Monday, July 8, 2024 / Rules 
and Regulations  

[[Page 56028]]


-----------------------------------------------------------------------

CONSUMER FINANCIAL PROTECTION BUREAU

12 CFR Part 1092

[Docket No. CFPB-2022-0080]
RIN 3170-AB13


Registry of Nonbank Covered Persons Subject to Certain Agency and 
Court Orders

AGENCY: Consumer Financial Protection Bureau.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Under the Consumer Financial Protection Act of 2010 (CFPA), 
the Consumer Financial Protection Bureau (Bureau or CFPB) is issuing 
this final rule to require certain types of nonbank covered persons 
subject to certain final public orders obtained or issued by a 
government agency in connection with the offering or provision of a 
consumer financial product or service to report the existence of the 
orders and related information to a Bureau registry. The Bureau is also 
requiring certain supervised nonbanks to file annual reports regarding 
compliance with registered orders.

DATES: 
    Effective date: This rule is effective on September 16, 2024.
    Implementation dates: For implementation dates, see Sec.  1092.206.

FOR FURTHER INFORMATION CONTACT: George Karithanom, Regulatory 
Implementation and Guidance Program Analyst, Office of Regulations, at 
202-435-7700. If you require this document in an alternative electronic 
format, please contact [email protected].

SUPPLEMENTARY INFORMATION:

I. Summary of the Final Rule

    The Bureau is adopting this final rule to establish and maintain a 
registry that will collect information about certain publicly available 
agency and court orders and facilitate the Bureau's supervision of 
certain companies. In this way, the Bureau will more effectively be 
able to monitor and to reduce the risks to consumers posed by entities 
that violate consumer protection laws. The final rule also authorizes 
the Bureau to consolidate this information in an online registry for 
use by the public and other regulators.
    The final rule requires certain nonbank covered person entities 
(with exclusions for insured depository institutions, insured credit 
unions, related persons, States, certain other entities, and natural 
persons) to register with the Bureau upon becoming subject to a public 
written order imposing obligations based on violations of certain 
consumer protection laws. Those entities will be required to register 
in a system established by the Bureau, provide basic identifying 
information about the company and the order (including a copy of the 
order), and periodically update the registry to ensure its continued 
accuracy and completeness. The Bureau intends to publish this 
information on its website and potentially in other forms.
    The Bureau will also require certain nonbanks subject to the 
Bureau's supervisory authority under section 1024(a) of the Consumer 
Financial Protection Act of 2010 (CFPA) \1\ annually to identify an 
executive (or executives) responsible for and knowledgeable of the 
firm's efforts to comply with the orders identified in the registry. 
The supervised nonbank entity will also be required to submit on an 
annual basis a written statement signed by the applicable executive 
regarding the entity's compliance with each order in the registry.
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 5514(a).
---------------------------------------------------------------------------

    Nonbanks that are subject to an order published on the Nationwide 
Multistate Licensing System's Consumer Access website (except for 
orders issued or obtained at least in part by the Bureau) may elect to 
comply with a one-time registration option in lieu of complying with 
the rule's notification and written-statement requirements with respect 
to that order.
    Nonbank registrants will have to register with the Bureau starting 
after an applicable implementation date for the registry specified in 
the rule. Different implementation dates are specified for larger 
participants, other supervised nonbanks, and other nonbanks not subject 
to Bureau supervision. Details on how to register will be provided 
through filing instructions.

II. Background

A. The Bureau and Other Agencies Take Enforcement Actions Against 
Nonbanks To Protect Consumers

    The Bureau administers and enforces Federal consumer financial laws 
against nonbanks in consumer financial markets. In addition to the 
Bureau, Congress has authorized multiple other Federal and State 
agencies to enforce Federal consumer financial laws, including the CFPA 
prohibition against unfair, deceptive, or abusive acts or practices 
(UDAAP) and enumerated statutes including the Truth in Lending Act, the 
Electronic Fund Transfer Act, the Fair Credit Reporting Act, the Equal 
Credit Opportunity Act, and other statutes.\2\ Several Federal 
agencies, most notably the Federal Trade Commission, also enforce 
section 5 of the Federal Trade Commission Act (FTC Act), which 
similarly prohibits unfair or deceptive acts or practices (UDAP).\3\ 
The prohibitions against unfair and deceptive acts or practices in the 
CFPA were modeled after the same prohibitions in the FTC Act. 
Furthermore, States across the country began codifying State UDAP 
statutes modeled after the FTC Act starting in the 1960s and 1970s.\4\ 
Many State UDAP statutes contain rules of construction requiring State 
courts to use interpretations of the FTC Act by the Federal courts and 
the FTC as a guide to interpreting their State UDAP statutes.\5\ These 
laws differ in many respects from each other, but generally they hail 
from a common consumer protection tradition originating with the FTC 
Act, similar to the CFPA's prohibition on UDAAP.
---------------------------------------------------------------------------

    \2\ See 12 U.S.C. 5481(12), 5552; 12 CFR part 1082; Bureau 
Interpretive Rule, Authority of States to Enforce the Consumer 
Financial Protection Act of 2010, 87 FR 31940 (May 26, 2022).
    \3\ 15 U.S.C. 45.
    \4\ Dee Pridgen, The Dynamic Duo of Consumer Protection: State 
and Private Enforcement of Unfair and Deceptive Trade Practices 
Laws, 81 Antitrust L.J. 911, 912 (2017).
    \5\ See, e.g., Ariz. Rev. Stat. Ann. sec. 44-1522(C) (courts 
``may use as a guide'' FTC and Federal court interpretations of the 
FTC Act); Fla. Stat. sec. 501.204(2) (expressing the intent of the 
legislature that ``due consideration and great weight'' be given to 
interpretations of the FTC Act when interpreting Florida's State 
UDAP statute).
---------------------------------------------------------------------------

    The Bureau was created in the wake of the 2008 financial crisis, 
which was caused by a variety of overlapping factors, including 
systemic malfeasance in the mortgage industry.\6\ Since passage of the 
CFPA, the Bureau has brought nearly 350 enforcement actions against 
nonbanks. When the Bureau issues an order against a covered person 
(often, but not always, as a consent order), or brings an action in a 
court of law that results in an order, the Bureau often follows up with 
supervisory or enforcement action to ensure the company's compliance 
with the order. On numerous occasions, the Bureau has uncovered 
companies that failed to comply with consent orders that the

[[Page 56029]]

companies entered into with the Bureau voluntarily.\7\
---------------------------------------------------------------------------

    \6\ See U.S. Fin. Crisis Inquiry Comm'n, The Financial Crisis 
Inquiry Report, at 104-11, 113-18 (2011), https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf; see also S. Rep. No. 111-176, 
at 11 (2010) (``Th[e] financial crisis was precipitated by the 
proliferation of poorly underwritten mortgages with abusive terms, 
followed by a broad fall in housing prices as those mortgages went 
into default and led to increasing foreclosures.'').
    \7\ See, e.g., RMK Financial Corp. d/b/a Majestic Home Loan or 
MHL, CFPB No. 2023-CFPB-0002 (Feb. 27, 2023); CFPB v. American 
Advisors Group, No. 21-cv-01674-JLS-JDEx (C.D. Cal. Oct. 25, 2021); 
Discover Bank, CFPB No. 2020-BCFP-0026 (Dec. 22, 2020); Bureau of 
Consumer Fin. Prot. v. Encore Capital Grp., No. 3:20-cv-01750-GPC-
KSC (S.D. Cal. Oct. 16, 2020); Sec. Nat'l Automotive Acceptance Co., 
CFPB No. 2017-CFPB-0013 (Apr. 26, 2017); Military Credit Servs., 
LLC, CFPB No. 2016-CFPB-0029 (Dec. 20, 2016).
---------------------------------------------------------------------------

B. Congress Instructed the Bureau To Monitor Markets for Consumer 
Financial Products and Services

    Congress established the Bureau to regulate (among other things) 
the offering and provision of consumer financial products and services 
under the Federal consumer financial laws, and it granted the Bureau 
authority to ensure that the Bureau could achieve that mission.\8\ But 
it also understood that the Bureau could not fully and effectively 
achieve that mission unless it developed a clear window into the 
markets for and persons involved in offering and providing such 
products and services. To that end, Congress mandated that the Bureau 
``shall monitor for risks to consumers in the offering or provision of 
consumer financial products or services, including developments in 
markets for such products or services.'' \9\
---------------------------------------------------------------------------

    \8\ See 12 U.S.C. 5511.
    \9\ See 12 U.S.C. 5512(c)(1).
---------------------------------------------------------------------------

    Notably, Congress directed the Bureau to engage in such monitoring 
``to support its rulemaking and other functions,'' \10\ instructing the 
Bureau to use monitoring to inform all of its work. Congress separately 
described the Bureau's ``primary functions'' as ``conducting financial 
education programs''; ``collecting, investigating, and responding to 
consumer complaints''; ``collecting, researching, monitoring, and 
publishing information relevant to the functioning of markets for 
consumer financial products and services to identify risks to consumers 
and the proper functioning of such markets''; ``supervising covered 
persons for compliance with Federal consumer financial law, and taking 
appropriate enforcement action to address violations of Federal 
consumer financial law''; ``issuing rules, orders, and guidance 
implementing Federal consumer financial law''; and ``performing such 
support activities as may be necessary or useful to facilitate the 
other functions of the Bureau.'' \11\ Put simply, Congress envisioned 
that the Bureau would use its market-monitoring work to inform its 
activities, all with the express purpose of ``ensuring that all 
consumers have access to markets for consumer financial products and 
services and that markets for consumer financial products and services 
are fair, transparent, and competitive.'' \12\
---------------------------------------------------------------------------

    \10\ Id. (emphasis added).
    \11\ 12 U.S.C. 5511(c).
    \12\ 12 U.S.C. 5511(a).
---------------------------------------------------------------------------

    To achieve these ends, Congress took care to ensure that the Bureau 
had the tools necessary to effectively monitor for risks in the markets 
for consumer financial products and services. It granted the Bureau 
authority ``to gather information from time to time regarding the 
organization, business conduct, markets, and activities of covered 
persons and service providers.'' \13\ In particular, Congress 
authorized the Bureau to ``require covered persons and service 
providers participating in consumer financial services markets to file 
with the Bureau, under oath or otherwise, in such form and within such 
reasonable period of time as the Bureau may prescribe by rule or order, 
annual or special reports, or answers in writing to specific 
questions,'' that would furnish the Bureau with such information ``as 
necessary for the Bureau to fulfill the monitoring . . . 
responsibilities imposed by Congress.'' \14\
---------------------------------------------------------------------------

    \13\ 12 U.S.C. 5512(c)(4)(A).
    \14\ 12 U.S.C. 5512(c)(4)(B)(ii) (emphasis added).
---------------------------------------------------------------------------

    To assist the Bureau in allocating resources to perform its 
monitoring, Congress also identified a non-exhaustive list of factors 
that the Bureau may consider, including ``likely risks and costs to 
consumers associated with buying or using a type of consumer financial 
product or service''; \15\ ``understanding by consumers of the risks of 
a type of consumer financial product or service''; \16\ ``the legal 
protections applicable to the offering or provision of a consumer 
financial product or service, including the extent to which the law is 
likely to adequately protect consumers''; \17\ ``rates of growth in the 
offering or provision of a consumer financial product or service''; 
\18\ ``the extent, if any, to which the risks of a consumer financial 
product or service may disproportionately affect traditionally 
underserved consumers''; \19\ and ``the types, number, and other 
pertinent characteristics of covered persons that offer or provide the 
consumer financial product or service.'' \20\
---------------------------------------------------------------------------

    \15\ 12 U.S.C. 5512(c)(2)(A).
    \16\ 12 U.S.C. 5512(c)(2)(B).
    \17\ 12 U.S.C. 5512(c)(2)(C).
    \18\ 12 U.S.C. 5512(c)(2)(D).
    \19\ 12 U.S.C. 5512(c)(2)(E).
    \20\ 12 U.S.C. 5512(c)(2)(F).
---------------------------------------------------------------------------

    Congress also anticipated that the insights the Bureau would gain 
from such market monitoring should at times become available to a wider 
audience than just Bureau employees. Not only did Congress mandate that 
the Bureau ``publish not fewer than 1 report of significant findings of 
its monitoring . . . in each calendar year,'' but it also instructed 
that the Bureau may make non-confidential information available to the 
public ``as is in the public interest.'' \21\ Congress gave the Bureau 
discretion to determine the format of publication, authorizing the 
Bureau to make the information available ``through aggregated reports 
or other appropriate formats designed to protect confidential 
information in accordance with [specified protections in this 
section].'' \22\ These instructions regarding public release of market-
monitoring information align with one of the Bureau's ``primary 
functions'' mentioned above--to ``publish[ ] information relevant to 
the functioning of markets for consumer financial products and services 
to identify risks to consumers and the proper functioning of such 
markets.'' \23\
---------------------------------------------------------------------------

    \21\ 12 U.S.C. 5512(c)(3).
    \22\ 12 U.S.C. 5512(c)(3)(B).
    \23\ 12 U.S.C. 5511(c)(3).
---------------------------------------------------------------------------

    The Bureau takes its market-monitoring obligations seriously, and 
it has incorporated valuable insights gained to date from such 
monitoring in conducting the multiple functions assigned to it under 
the CFPA, including its supervisory and enforcement efforts, as well as 
its rulemaking, consumer education, and other functions.\24\ As 
discussed in further detail below, this final rule seeks to continue 
and build upon that commitment by creating an order registry to 
accomplish a number of goals, with a particular focus on

[[Page 56030]]

monitoring for risks to consumers related to repeat offenders of 
consumer protection law. A public registry of agency and court orders 
issued or obtained in connection with violations of law will help the 
Bureau and the broader public monitor trends concerning corporate 
recidivism relating to consumer protection law, including areas where 
prior violations of law are indicia of risk to consumers.
---------------------------------------------------------------------------

    \24\ See, e.g., CFPB Semiannual Regulatory Agenda, 87 FR 5326, 
5328 (Jan. 31, 2022) (``The Bureau's market monitoring work assists 
in identifying issues for potential future rulemaking work.''); 
Payday, Vehicle, and Certain High-Cost Installment Loans, 82 FR 
54472, 54475, 54488, 54498 (Nov. 17, 2017) (citing information 
obtained through Bureau market-monitoring efforts); Arbitration 
Agreements, 82 FR 33210, 33220 (July 19, 2017) (same). See also, 
e.g., Consumer Fin. Prot. Bureau, Buy Now, Pay Later: Market trends 
and consumer impacts (Sept. 2022), https://files.consumerfinance.gov/f/documents/cfpb_buy-now-pay-later-market-trends-consumer-impacts_report_2022-09.pdf (publishing information 
obtained through Bureau market-monitoring efforts); Consumer Fin. 
Prot. Bureau, Consumer Credit Trends: Credit Card Line Decreases 
(June 2022), https://files.consumerfinance.gov/f/documents/cfpb_credit-card-line-decreases_report_2022-06.pdf (same); Consumer 
Fin. Prot. Bureau, Data Point: Checking Account Overdraft at 
Financial Institutions Served by Core Processors (Dec. 2021), 
https://files.consumerfinance.gov/f/documents/cfpb_overdraft-core-processors_report_2021-12.pdf (same).
---------------------------------------------------------------------------

    More generally, entities subject to such public orders relating to 
the offering or provision of consumer financial products and services 
may pose ongoing risks to consumers in the markets for those products 
and services. A broad collection of such public orders will shed light 
on how laws are being enforced across consumer protection laws, 
jurisdictions, and markets, and help identify trends and potential gaps 
in enforcement. Both heightened enforcement and the absence of 
enforcement could possibly provide information regarding risks to 
consumers--the former as evidence that government agencies with various 
jurisdictions have identified the need to enforce consumer protection 
laws, and the latter as potential evidence of less risk to consumers, 
or perhaps of inattention by regulatory agencies. A centralized, up-to-
date repository of such public orders will provide valuable market-
based insight that the Bureau could use both to identify concerning 
trends in these markets that it otherwise might miss and to decide 
which of several different policy tools would best address the consumer 
risks presented by these trends. In short, the information sought will 
significantly increase the Bureau's ability to identify, understand, 
and ultimately prevent harm in the markets for consumer financial 
products and services. These and other core goals of the information 
the Bureau will collect are discussed further below at part IV.
    Consistent with an approach suggested by commenters, the Bureau is 
adopting a one-time registration option for nonbanks that are 
identified by name as a party subject to an order that is published on 
the Nationwide Multistate Licensing System (NMLS) Consumer Access 
website, www.NMLSConsumerAccess.org (except for orders issued or 
obtained by the Bureau). Such nonbanks may choose to submit certain 
information to the Bureau in lieu of complying with the other ongoing 
requirements of the final rule with respect to the order. The 
information provided to the Bureau in connection with such orders will 
notify the Bureau about the nonbank and the relevant order and will 
enable the Bureau to follow up with the NMLS's operator and any 
applicable agency as appropriate.

C. Congress Authorized the Bureau To Supervise Certain Nonbank Covered 
Persons

    One of the Bureau's key responsibilities under the CFPA is the 
supervision of very large banks, thrifts, and credit unions, and their 
affiliates, and certain nonbank covered persons. Congress has 
authorized the Bureau to supervise certain categories of nonbank 
covered persons under CFPA section 1024.\25\ Congress provided that the 
Bureau ``shall require reports and conduct examinations on a periodic 
basis'' of nonbank covered persons subject to its supervisory authority 
for purposes of ``assessing compliance with the requirements of Federal 
consumer financial law''; ``obtaining information about the activities 
and compliance systems or procedures of such person[s]''; and 
``detecting and assessing risks to consumers and to markets for 
consumer financial products and services.'' \26\ Pursuant to the CFPA, 
the Bureau implements a risk-based supervision program under which it 
prioritizes nonbank covered persons for supervision in accordance with 
its assessment of risks posed to consumers.\27\ In making 
prioritization determinations, the Bureau considers several factors, 
including ``the asset size of the covered person,'' \28\ ``the volume 
of transactions involving consumer financial products or services in 
which the covered person engages,'' \29\ ``the risks to consumers 
created by the provision of such consumer financial products or 
services,'' \30\ ``the extent to which such institutions are subject to 
oversight by State authorities for consumer protection,'' \31\ and 
``any other factors that the Bureau determines to be relevant to a 
class of covered persons.'' \32\ CFPA section 1024(b)(7)(A)-(C) further 
authorizes the Bureau to prescribe rules to facilitate supervision and 
assessing and detecting risks to consumers, as well as to ensure that 
supervised nonbanks ``are legitimate entities and are able to perform 
their obligations to consumers.'' \33\
---------------------------------------------------------------------------

    \25\ 12 U.S.C. 5514.
    \26\ 12 U.S.C. 5514(b)(1).
    \27\ 12 U.S.C. 5514(b)(2).
    \28\ 12 U.S.C. 5514(b)(2)(A).
    \29\ 12 U.S.C. 5514(b)(2)(B).
    \30\ 12 U.S.C. 5514(b)(2)(C).
    \31\ 12 U.S.C. 5514(b)(2)(D).
    \32\ 12 U.S.C. 5514(b)(2)(E).
    \33\ 12 U.S.C. 5514(b)(7)(A)-(C).
---------------------------------------------------------------------------

    Under CFPA section 1024(b)(7)(A)-(C), the Bureau is requiring that 
certain supervised nonbanks annually submit a written statement 
regarding the company's compliance with any outstanding registered 
orders. The statement must be signed by a designated senior executive. 
In the written statement, the attesting executive must generally 
describe the steps the executive has undertaken to review and oversee 
the company's activities subject to the applicable order for the 
preceding calendar year. The executive must then provide an attestation 
regarding the company's compliance with the order.
    The required written statement will assist the Bureau in achieving 
each of the statutory objectives listed in CFPA section 1024(b)(7)(A)-
(C). Therefore, each of those objectives provides a distinct, 
independently sufficient basis for the final rule's written-statement 
requirements.\34\
---------------------------------------------------------------------------

    \34\ For a more extended discussion of these matters, see part 
IV(D) and the section-by-section discussion of Sec.  1092.204 below.
---------------------------------------------------------------------------

    First, requiring submission of an annual written statement will 
facilitate Bureau supervision and the Bureau's assessment and detection 
of risks to consumers. In particular, as part of the Bureau's risk-
based supervision program, the Bureau considers supervised nonbanks' 
compliance record regarding consumer protection law when prioritizing 
supervisory resources. The annual written statement, including the 
steps taken by the executive to review and oversee activity related to 
the order, will provide the CFPB valuable information in understanding 
how compliance is managed at the supervised entity. The requirement 
will also provide valuable information in connection with other aspects 
of the Bureau's supervisory work and will assist the Bureau's 
monitoring efforts. For example, in 2022 the Bureau announced that it 
was increasing its supervisory focus on repeat offenders, particularly 
those which violate agency or court orders.\35\ As part of that focus, 
it created a Repeat Offender Unit within its supervision program 
focused on: (i) reviewing and monitoring the activities of repeat 
offenders; (ii) identifying the root cause of recurring violations; 
(iii) pursuing and recommending solutions and remedies that hold 
entities accountable for failing to consistently comply with Federal 
consumer financial law; and (iv) designing a model for order review and 
monitoring that reduces the occurrences

[[Page 56031]]

of repeat offenses.\36\ The Repeat Offender Unit is tasked more 
generally with enhancing detection of repeat offenses, developing 
processes for rapid review and response designed to address root causes 
of violations, and recommending corrective actions designed to stop 
recidivist behavior.\37\ The Bureau believes that the annual written 
statement will greatly facilitate that work, among other things.
---------------------------------------------------------------------------

    \35\ See Consumer Fin. Prot. Bureau, Supervisory Highlights: 
Issue 28, Fall 2022, at 2-3 (Nov. 2022), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.pdf.
    \36\ Id.
    \37\ Id. at 3.
---------------------------------------------------------------------------

    Second, the final rule's written-statement requirements will help 
ensure the company providing the statement is a legitimate entity and 
is able to perform its obligations to consumers. Information regarding 
a company's compliance with outstanding orders is probative of whether 
the company is willing and able to satisfy its legal obligations and of 
whether the company treats potential sanctions for repeat violations of 
relevant consumer protection laws as a mere cost of doing business. The 
written-statement requirements will also provide an incentive for 
supervised nonbanks to perform their obligations to consumers by 
requiring supervised nonbanks to specify which individual executives 
are responsible for achieving compliance with particular orders. 
Publication of the identity of this executive as intended by the Bureau 
will enhance the incentive.

III. Legal Authority

    The Bureau is issuing this final rule pursuant to its authority 
under the CFPA. This section includes a general discussion of several 
CFPA provisions on which the Bureau relies in this rulemaking. 
Additional description of these authorities, and the final rule's 
reliance on them, is also contained in part II above and part IV below 
as well as in the section-by-section analysis.

A. CFPA Section 1022(b)

    CFPA section 1022(b)(1) authorizes the Bureau to prescribe rules 
``as may be necessary or appropriate to enable the Bureau to administer 
and carry out the purposes and objectives of the Federal consumer 
financial laws, and to prevent evasions thereof.'' \38\ Among other 
statutes, the CFPA--i.e., title X of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (Dodd-Frank Act)--is a Federal consumer 
financial law.\39\ Accordingly, in issuing the final rule, the Bureau 
is exercising its authority under CFPA section 1022(b) to prescribe 
rules that carry out the purposes and objectives of the CFPA and 
prevent evasions thereof. CFPA section 1022(b)(2) prescribes certain 
standards for rulemaking that the Bureau must follow in exercising its 
authority under section 1022(b)(1).\40\ For a discussion of the 
Bureau's standards for rulemaking under CFPA section 1022(b)(2), see 
part VIII below.
---------------------------------------------------------------------------

    \38\ 12 U.S.C. 5512(b)(1).
    \39\ See 12 U.S.C. 5481(14) (defining ``Federal consumer 
financial law'' to include the provisions of title X of the Dodd-
Frank Act).
    \40\ See 12 U.S.C. 5512(b)(2).
---------------------------------------------------------------------------

B. CFPA Section 1022(c)(1)-(4) and (7)

    The provisions of the final rule that (1) require nonbank covered 
persons to inform the Bureau that they have an applicable order entered 
against them, (2) provide basic identifying and administrative 
information and information regarding the orders (including copies of 
the orders), and (3) authorize publication of this information, are 
authorized under CFPA sections 1022(c)(1) through (4) and 1022(c)(7), 
as well as CFPA section 1022(b).\41\
---------------------------------------------------------------------------

    \41\ 12 U.S.C. 5512(b), (c)(1)-(4), (c)(7).
---------------------------------------------------------------------------

    CFPA sections 1022(c)(1)-(4) authorize the Bureau to prescribe 
rules to collect information from covered persons for purposes of 
monitoring for risks to consumers in the offering or provision of 
consumer financial products or services. The Bureau is collecting this 
information to monitor, on an ongoing basis, both individual and 
market-wide compliance with consumer protection laws and orders for 
alleged violations of those laws. The Bureau considers violations of 
consumer protection laws probative of ``risks to consumers in the 
offering and provision of consumer financial products or services.'' 
\42\ In particular, the Bureau believes that entities subject to public 
orders enforcing the law relating to the offering or provision of 
consumer financial products and services may pose heightened and 
ongoing risks to consumers in the markets for those products and 
services. It further believes that monitoring for such orders will 
allow the Bureau to track specific instances of, and more general 
developments regarding, potential corporate recidivism, which presents 
special risks to consumers for reasons discussed in greater detail 
below. The Bureau also believes that enforcement trends, as shown by 
public orders enforcing the law across consumer protection laws, 
jurisdictions, and markets, will potentially shed light on risks to 
consumers in the offering or provision of consumer financial products 
or services. Heightened enforcement could indicate areas where numerous 
regulators have identified risk of harm to consumers. Conversely, the 
absence of enforcement in other areas could indicate less risk to 
consumers, or perhaps a lack of attention by regulators that shows a 
need for further monitoring.
---------------------------------------------------------------------------

    \42\ 12 U.S.C. 5512(c)(1).
---------------------------------------------------------------------------

    More specifically, in order to support its rulemaking and other 
functions, section 1022(c)(1) of the CFPA requires the Bureau to 
monitor for risks to consumers in the offering or provision of consumer 
financial products or services, including developments in the markets 
for such products or services.\43\ As discussed further below at part 
IV(B), section 1022(c)(2) of the CFPA authorizes the Bureau to allocate 
resources to perform the monitoring required by section 1022 by 
considering ``likely risks and costs to consumers associated with 
buying or using a type of consumer financial product or service,'' 
``understanding by consumers of the risks of a type of consumer 
financial product or service,'' ``the legal protections applicable to 
the offering or provision of a consumer financial product or service, 
including the extent to which the law is likely to adequately protect 
consumers,'' ``rates of growth in the offering or provision of a 
consumer financial product or service,'' ``the extent, if any, to which 
the risks of a consumer financial product or service may 
disproportionately affect traditionally underserved consumers,'' and 
``the types, number, and other pertinent characteristics of covered 
persons that offer or provide the consumer financial product or 
service.'' \44\ Section 1022(c)(4)(A) of the CFPA authorizes the Bureau 
to conduct the monitoring required by section 1022 by ``gather[ing] 
information from time to time regarding the organization, business 
conduct, markets, and activities of covered persons and service 
providers.'' \45\ The Bureau is authorized to gather this information 
by, among other things, requiring covered persons participating in 
consumer financial services markets to file annual or special reports, 
or answers in writing to specific questions, that furnish information 
``as necessary for the Bureau to fulfill the monitoring . . . 
responsibilities imposed by Congress.'' \46\ The Bureau

[[Page 56032]]

may require such information to be filed ``in such form and within such 
reasonable period of time as the Bureau may prescribe by rule or 
order.'' \47\
---------------------------------------------------------------------------

    \43\ 12 U.S.C. 5512(c)(1) (``In order to support its rulemaking 
and other functions, the Bureau shall monitor for risks to consumers 
in the offering or provision of consumer financial products or 
services, including developments in markets for such products or 
services.'').
    \44\ 12 U.S.C. 5512(c)(2)(A)-(F).
    \45\ 12 U.S.C. 5512(c)(4)(A).
    \46\ 12 U.S.C. 5512(c)(4)(B)(ii) (``In order to gather 
information described in subparagraph (A), the Bureau may . . . 
require covered persons and service providers participating in 
consumer financial services markets to file with the Bureau, under 
oath or otherwise, in such form and within such reasonable period of 
time as the Bureau may prescribe by rule or order, annual or special 
reports, or answers in writing to specific questions, furnishing 
information described in paragraph (4), as necessary for the Bureau 
to fulfill the monitoring, assessment, and reporting 
responsibilities imposed by Congress.'').
    \47\ 12 U.S.C. 5512(c)(4)(B)(ii).
---------------------------------------------------------------------------

    Section 1022(c)(7)(A) of the CFPA further authorizes the Bureau to 
``prescribe rules regarding registration requirements applicable to a 
covered person, other than an insured depository institution, insured 
credit union, or related person.'' \48\ Section 1022(c)(7)(B) provides 
that, ``[s]ubject to rules prescribed by the Bureau, the Bureau may 
publicly disclose registration information to facilitate the ability of 
consumers to identify covered persons that are registered with the 
Bureau.'' \49\ The Bureau interprets section 1022(c)(7)(B) as 
authorizing it to publish registration information required by Bureau 
rule under section 1022(c)(7)(A) so that consumers may identify the 
nonbank covered persons on which the Bureau has imposed registration 
requirements.
---------------------------------------------------------------------------

    \48\ 12 U.S.C. 5512(c)(7)(A).
    \49\ 12 U.S.C. 5512(c)(7)(B).
---------------------------------------------------------------------------

    Finally, CFPA section 1022(c)(3) authorizes the Bureau to publicly 
release information obtained pursuant to CFPA section 1022, subject to 
limitations specified therein.\50\ Specifically, section 1022(c)(3) 
states that the Bureau ``may make public such information obtained by 
the Bureau under [section 1022] as is in the public interest, through 
aggregated reports or other appropriate formats designed to protect 
confidential information in accordance with [specified protections in 
section 1022].'' \51\ Information submitted to the Bureau's registry is 
protected by, among other things, CFPA section 1022(c)(8), which states 
that ``[i]n collecting information from any person, publicly releasing 
information held by the Bureau, or requiring covered persons to 
publicly report information, the Bureau shall take steps to ensure that 
proprietary, personal, or confidential consumer information that is 
protected from public disclosure under [the Freedom of Information Act, 
5 U.S.C. 552(b),] or [the Privacy Act of 1974, 5 U.S.C. 552a,] or any 
other provision of law, is not made public under [the CFPA].'' \52\ The 
Bureau's registry is designed to not collect any protected proprietary, 
personal, or confidential consumer information, and thus, the Bureau 
will not publish, or require public reporting of, any such information.
---------------------------------------------------------------------------

    \50\ See 12 U.S.C. 5512(c)(3).
    \51\ 12 U.S.C. 5512(c)(3)(B).
    \52\ 12 U.S.C. 5512(c)(8). In the remainder of this preamble, 
the Bureau refers to information protected from disclosure under 
CFPA section 1022(c)(8) as ``protected proprietary, personal, or 
confidential consumer information.''
---------------------------------------------------------------------------

    See the introduction to the section-by-section analysis of Sec.  
1092.202 for a discussion of certain comments received by the Bureau 
about the discussion in the Bureau's proposed rule \53\ of the Bureau's 
authorities under CFPA section 1022(b)(1)-(4) and (7).
---------------------------------------------------------------------------

    \53\ See 88 FR 6088 (Jan. 30, 2023). For further discussion of 
the Bureau's proposed rule, see part V(C) below.
---------------------------------------------------------------------------

C. CFPA Section 1024(b)

    As explained above, section 1024(b) of the CFPA authorizes the 
Bureau to exercise supervisory authority over certain nonbank covered 
persons.\54\ Section 1024(b)(1) requires the Bureau to periodically 
require reports and conduct examinations of persons subject to its 
supervisory authority to assess compliance with Federal consumer 
financial law, obtain information about the activities and compliance 
systems or procedures of persons subject to its supervisory authority, 
and detect and assess risks to consumers and to markets for consumer 
financial products and services.\55\ Section 1024(b)(2) requires that 
the Bureau exercise its supervisory authority over nonbank covered 
persons under section 1024(b)(1) based on its assessment of risks posed 
to consumers in the relevant product markets and geographic markets, 
and taking into consideration, as applicable: ``(A) the asset size of 
the covered person; (B) the volume of transactions involving consumer 
financial products or services in which the covered person engages; (C) 
the risks to consumers created by the provision of such consumer 
financial products or services; (D) the extent to which such 
institutions are subject to oversight by State authorities for consumer 
protection; and (E) any other factors that the Bureau determines to be 
relevant to a class of covered persons.'' \56\
---------------------------------------------------------------------------

    \54\ The nonbank covered persons over which the Bureau has 
supervisory authority are listed in section 1024(a)(1) of the CFPA. 
They include covered persons that: offer or provide origination, 
brokerage, or servicing of loans secured by real estate for use by 
consumers primarily for personal, family, or household purposes, or 
loan modification or foreclosure relief services in connection with 
such loans; are larger participants of a market for consumer 
financial products or services, as defined by Bureau rule; the 
Bureau has reasonable cause to determine, by order, that the covered 
person is engaging, or has engaged, in conduct that poses risks to 
consumers with regard to the offering or provision of consumer 
financial products or services; offer or provide private education 
loans; or offer or provide payday loans. 12 U.S.C. 5514(a)(1).
    \55\ 12 U.S.C. 5514(b)(1) provides: ``The Bureau shall require 
reports and conduct examinations on a periodic basis of persons 
described in subsection (a)(1) for purposes of--(A) assessing 
compliance with the requirements of Federal consumer financial law; 
(B) obtaining information about the activities and compliance 
systems or procedures of such person; and (C) detecting and 
assessing risks to consumers and to markets for consumer financial 
products and services.''
    \56\ 12 U.S.C. 5514(b)(2).
---------------------------------------------------------------------------

    Section 1024(b)(7) of the CFPA in turn identifies three independent 
sources of Bureau rulemaking authority. First, section 1024(b)(7)(A) 
requires the Bureau to prescribe rules to facilitate the supervision of 
nonbank covered persons subject to the Bureau's supervisory authority 
and assessment and detection of risks to consumers.\57\ Second, section 
1024(b)(7)(B) authorizes the Bureau to require nonbank covered persons 
subject to its supervisory authority to ``generate, provide, or retain 
records for the purposes of facilitating supervision of such persons 
and assessing and detecting risks to consumers.'' \58\ As explained 
below in the introduction to the section-by-section analysis of Sec.  
1092.204, the Bureau interprets this section as authorizing it to 
require nonbank covered persons subject to its supervisory authority to 
``generate''--i.e., create \59\--reports regarding their activities and 
then ``provide'' them to the Bureau.
---------------------------------------------------------------------------

    \57\ 12 U.S.C. 5514(b)(7)(A) (``The Bureau shall prescribe rules 
to facilitate supervision of persons described in subsection (a)(1) 
and assessment and detection of risks to consumers.'').
    \58\ 12 U.S.C. 5514(b)(7)(B) (``The Bureau may require a person 
described in subsection (a)(1), to generate, provide, or retain 
records for the purposes of facilitating supervision of such persons 
and assessing and detecting risks to consumers.'').
    \59\ See Generate, Webster's Third New International Dictionary 
(1981) (defining ``generate'' as ``to bring into existence'').
---------------------------------------------------------------------------

    The third source of authority, CFPA section 1024(b)(7)(C), 
authorizes the Bureau to prescribe rules regarding nonbank covered 
persons subject to its supervisory authority ``to ensure that such 
persons are legitimate entities and are able to perform their 
obligations to consumers.'' \60\ The Bureau interprets this section as 
authorizing it to prescribe substantive rules to ensure that supervised 
entities are willing and able to comply with their legal, financial,

[[Page 56033]]

and other obligations to consumers, including those imposed by Federal 
consumer financial law. The term ``obligations'' encompasses ``anything 
that a person is bound to do or forbear from doing,'' including duties 
``imposed by law, contract, [or] promise.'' \61\ The Bureau construes 
the phrase ``legitimate entities'' as encompassing an inquiry into 
whether an entity takes seriously its duty to ``[c]omply[ ] with the 
law.'' \62\ Legitimate entities do not presume they will break the law 
and treat the risk of enforcement actions for violations of legal 
obligations as a mere cost of doing business. Instead, legitimate 
entities work in good faith to have protocols in place aimed at 
ensuring compliance with their legal obligations and detecting and 
appropriately addressing any legal violations that the entity may 
commit.
---------------------------------------------------------------------------

    \60\ 12 U.S.C. 5514(b)(7)(C) (``The Bureau may prescribe rules 
regarding a person described in subsection (a)(1), to ensure that 
such persons are legitimate entities and are able to perform their 
obligations to consumers. Such requirements may include background 
checks for principals, officers, directors, or key personnel and 
bonding or other appropriate financial requirements.'').
    \61\ Obligation, Black's Law Dictionary (11th ed. 2019).
    \62\ Legitimate, Black's Law Dictionary (11th ed. 2019) 
(defining ``legitimate'' as ``[c]omplying with the law; lawful''); 
see also Legitimate, Webster's Second New International Dictionary 
(1934) (defining ``legitimate'' as ``[a]ccordant with law or with 
established legal forms and requirements; lawful''); Legitimate, 
Webster's Third New International Dictionary (1981) (similar).
---------------------------------------------------------------------------

    While each of the three subparagraphs of section 1024(b)(7) 
discussed above operates as independent sources of rulemaking 
authority, the subparagraphs also overlap in several respects, such 
that a particular rule may be (and, in the case of this final rule, is) 
authorized by more than one of the subparagraphs. For example, rules 
requiring the generation, provision, or retention of records generally 
will be authorized under both subparagraphs 1024(b)(7)(A) and (B). That 
is so because subparagraph 1024(b)(7)(B) makes clear that the Bureau's 
authority under subparagraph 1024(b)(7)(A) to prescribe rules to 
facilitate supervision and assessment and detection of risks to 
consumers extends to requiring covered persons subject to the Bureau's 
supervisory authority ``to generate, provide or retain records for the 
purposes of facilitating supervision of such persons and assessing and 
detecting risks to consumers.'' \63\
---------------------------------------------------------------------------

    \63\ 12 U.S.C. 5514(b)(7)(B); see also, e.g., Barton v. Barr, 
140 S. Ct. 1442, 1453 (2020) (``redundancies . . . in statutory 
drafting'' may reflect ``a congressional effort to be doubly 
sure''); Atlantic Richfield Co. v. Christian, 140 S. Ct. 1335, 1350 
n.5 (2020) (concluding that ``Congress employed a belt and 
suspenders approach'' in statute); Marx v. Gen. Revenue Corp., 568 
U.S. 371, 383-85 (2013) (statutory language is ``not . . . 
superfluous if Congress included it to remove doubt'' about an 
issue).
---------------------------------------------------------------------------

    See the introduction to the section-by-section analysis of Sec.  
1092.204 below for a discussion of certain comments received by the 
Bureau about the proposal's discussion of the Bureau's authorities 
under CFPA section 1024(b).

IV. Why the Bureau Is Issuing This Final Rule

A. Overview

    The Bureau is issuing this final rule to require nonbanks to report 
certain public agency and court orders because the Bureau believes that 
not only the Bureau, but also consumers, the public, and other 
potential users of the Bureau's registry will benefit from the creation 
and maintenance of a central public repository for information 
regarding certain public orders that have been imposed upon nonbank 
covered persons.
    Agency and court orders are not suggestions. They are legally 
binding orders intended to prevent and remedy violations of the law. 
When an agency issues such an order, or seeks a court order, it 
typically has determined that the problems at the applicable entity are 
sufficiently serious to merit the expenditure of that agency's limited 
resources and perhaps the attention of the courts.
    By establishing an effective registry for collecting public orders 
enforcing the law across different sectors of entity misconduct, the 
final rule will allow the Bureau to more effectively monitor for 
potential risks to consumers arising from both individual instances and 
broader patterns of recidivism. Persons that are subject to one or more 
orders that would require registration under the final rule may pose 
greater risks to consumers than others. And the existence of multiple 
orders may serve as a particular ``red flag'' with respect to risks to 
consumers and as a signal of potential recidivism. The existence of 
multiple orders may also indicate broader problems at the entity that 
pose related risks to consumers--including lack of sufficient controls 
related to the offering and provision of consumer financial products 
and services, inadequate compliance management systems and processes, 
and an unwillingness or inability of senior management to comply with 
laws subject to the Bureau's jurisdiction.
    The Bureau also concludes that collecting information regarding 
public agency and court orders enforcing the law will help it identify 
broader trends related to risks to consumers in the offering and 
provision of consumer financial products and services. For example, 
collecting this information would inform the Bureau about enforcement 
activity across geographic or product markets with respect to 
particular consumer protection laws, increases and decreases over time 
in such activity, and many other relevant matters. Notably, by studying 
how laws are being enforced across consumer protection laws, 
jurisdictions, and markets, the Bureau will be able to identify 
indications of risks to consumers. For example, the existence of 
enforcement activity in multiple jurisdictions among certain products, 
services, or features, or related to certain legal requirements, or 
concerning certain consumer risks, could indicate areas of heightened 
consumer risk that warrant further attention by regulators. Or such 
enforcement activity might be an indication of appropriate attention by 
other regulators, which might be an indication that applicable nonbanks 
are subject to adequate oversight, or that risk to consumers in certain 
areas may otherwise be reduced. By contrast, the absence of enforcement 
activity in certain areas could potentially indicate less risk to 
consumers or could be evidence of less attention by regulators and a 
need to increase monitoring activities. The Bureau thus concludes that 
obtaining information regarding such orders will enable it to better 
monitor risks to consumers in the offering or provision of consumer 
financial products and services, including developments in the markets 
for such products and services, under its authority at CFPA section 
1022(c).\64\
---------------------------------------------------------------------------

    \64\ 12 U.S.C. 5512(c).
---------------------------------------------------------------------------

    As described further below, the Bureau intends to make a registry 
of these orders publicly available. The Bureau anticipates that 
publishing such a registry will, among other things, allow other 
regulators at the Federal, State, and local level tasked with 
protecting consumers to realize many of the same market-monitoring 
benefits that the Bureau anticipates obtaining from this rule. 
Publication will also facilitate the ability of consumers to identify 
the covered persons that are registered with the Bureau. In addition, 
publication will enhance the ability of investors, research 
organizations, firms conducting due diligence, and the media to locate, 
review, and monitor orders enforcing the law.
    The final rule also will assist the Bureau's supervisory work by 
collecting additional information in the form of a written statement 
from certain entities that are subject to the Bureau's supervision and 
examination authority. As explained in greater detail below, requiring 
certain supervised entities to designate a senior executive officer 
with knowledge of, and control over, the entity's efforts to comply 
with each relevant order, and requiring that

[[Page 56034]]

executive to submit the information required to be contained in the 
written statement, will facilitate Bureau supervision efforts by 
providing important information about the entity, helping to prioritize 
the Bureau's supervisory activities, and otherwise assisting the 
Bureau's supervisory work. These requirements will also help ensure 
that the relevant entities are ``legitimate'' and ``are able to perform 
their obligations to consumers'' under CFPA section 1024(b)(7)(C), in 
part by incentivizing entities who might otherwise not take seriously 
their obligations to instead endeavor to comply with consumer 
protection laws and by highlighting the designated senior executive 
whose duties include ensuring such compliance.\65\
---------------------------------------------------------------------------

    \65\ 12 U.S.C. 5514(b)(7)(C).
---------------------------------------------------------------------------

General Comments Received
    This section discusses certain general comments received by the 
Bureau regarding the proposal.
    Various industry, consumer advocate, and other commenters generally 
agreed with the Bureau's statements in the proposal about the need for 
a new Bureau registry for nonbank entities that are subject to the 
Bureau's jurisdiction and that are subject to certain agency and court 
orders. A consumer advocate commenter stated that the registry would be 
immensely useful for the Bureau and other Federal and State regulators 
alike, and agreed that the proposed registry would advance a wide 
variety of statutory objectives, streamline regulatory processes, and 
create efficiencies that will result in greater consumer protection. An 
industry commenter stated that the proposed registry would help to 
compile and track violations and provide a basis from which to initiate 
risk-based supervision of nonbanks. Industry and consumer advocate 
commenters stated that the proposed registry would appropriately 
respond to a dearth of information about nonbank financial companies, 
including their number and type and the practices they engage in. 
Consumer advocate commenters stated that the proposal would, among 
other things, help unify efforts across regulators, help regulators and 
policymakers develop additional reforms to consumer protection, and 
help prevent future financial crises.
    Other commenters objected to the Bureau's proposal on various 
grounds, as discussed elsewhere in this preamble. Among other things, 
commenters stated the proposed registry would be duplicative of the 
NMLS and overly burdensome for registered entities.
    Industry commenters stated that the Bureau should either not 
finalize the proposal, or should carefully consider not finalizing the 
proposal, in light of the Fifth Circuit's decision in Consumer 
Financial Protection Bureau (CFPB) v. Community Financial Services 
Association of America \66\ and the U.S. Supreme Court's grant of the 
petition for certiorari in that case.\67\
---------------------------------------------------------------------------

    \66\ See Cmty. Fin. Servs. Ass'n of Am., Ltd. v. CFPB, 51 F.4th 
616 (5th Cir. 2022).
    \67\ No. 22-448 (U.S. argued Oct. 3, 2023).
---------------------------------------------------------------------------

    A consumer advocate commenter stated that the Bureau should clarify 
in the final rule the monetary penalties it will seek for each day of 
non-compliance, and that these penalties should be large. In the 
commenter's view, the failure to register as required under the final 
rule also should be an aggravating factor when assessing monetary 
penalties against the entity for other violations.
Response to General Comments Received
    The Bureau agrees with commenters regarding the need for a new 
Bureau registry for nonbank entities that are subject to the Bureau's 
jurisdiction and that are subject to certain agency and court orders. 
The final rule will establish a valuable Bureau registry that will 
provide the Bureau and other users with important information regarding 
such companies and the orders they are subject to. Comments objecting 
to the proposal are addressed elsewhere in this preamble.
    With respect to comments addressing the U.S. Court of Appeals for 
the Fifth Circuit's decision regarding the constitutionality of the 
Bureau's funding structure, the Supreme Court has reversed that 
decision, holding that the Bureau's funding structure does not violate 
the Appropriations Clause.\68\
---------------------------------------------------------------------------

    \68\ See CFPB v. Cmty. Fin. Servs. Ass'n of Am., Ltd., 601 U.S. 
416 (2024).
---------------------------------------------------------------------------

    The Bureau declines the consumer advocate commenter's suggestion to 
establish special rules or remedies for violation of the rule. The 
final rule is a Federal consumer financial law under the CFPA.\69\ 
Violation of the final rule would be an independent violation of 
Federal consumer financial law subject to enforcement as provided in 
the CFPA, and applicable remedies under law, including potential civil 
money penalties.\70\
---------------------------------------------------------------------------

    \69\ See 12 U.S.C. 5481(14) (defining term ``Federal consumer 
financial law'' as including ``any rule . . . prescribed by the 
Bureau'' under the CFPA).
    \70\ Violation of the final rule may also violate 12 U.S.C. 
5536(a)(2), which provides that it shall be unlawful for ``any 
covered person or service provider to fail or refuse, as required by 
Federal consumer financial law, or any rule or order issued by the 
Bureau thereunder--[] ] (A) to permit access to or copying of 
records; [] ] (B) to establish or maintain records; or [] ] (C) to 
make reports or provide information to the Bureau.''
---------------------------------------------------------------------------

B. Why the Bureau Is Issuing a Rule To Monitor for Risks Associated 
With Certain Agency and Court Orders

    Requiring registration and submissions regarding certain agency and 
court orders as provided in the final rule will assist the Bureau in 
monitoring for risks to consumers in the offering or provision of 
consumer financial products or services, in accordance with CFPA 
section 1022(c).\71\ The final rule's requirements to submit and update 
information regarding such agency and court orders related to the 
provision or offering of consumer financial products or services will 
provide important support for a variety of Bureau functions.
---------------------------------------------------------------------------

    \71\ 12 U.S.C. 5512(c).
---------------------------------------------------------------------------

    As the principal Federal regulator responsible for administering 
the Federal consumer financial laws, the Bureau's ability to 
effectively identify and monitor for potential risks to consumers 
arising out of apparent violations of core Federal and State consumer 
laws is important to the Bureau achieving its statutory purposes and 
objectives. Such information will help the Bureau satisfy its statutory 
obligation to monitor for risks to consumers in the markets for 
consumer financial products and services.\72\ For example, the registry 
will enable the Bureau to better identify an increase in the number of 
orders in a particular product market, in a particular geographic 
market, addressing similar consumer risks, or with other common 
features. The Bureau will be able to use this information to identify 
areas of heightened consumer risk that warrant further attention, as 
well as areas that are receiving adequate attention from other 
regulators. By contrast, the absence of enforcement activity in certain 
areas could indicate less risk to consumers, or it potentially could be 
evidence of less attention by regulators and a need to increase 
monitoring and other supervisory or regulatory activities. Over time, 
the Bureau's collection and review of information under the final rule 
will better enable the Bureau to evaluate, assess, and understand the 
relationship between such matters and the consumer risk that is related 
to covered orders. Thus, this information would help to inform and 
prioritize the Bureau's other market-monitoring efforts, including 
research regarding particular markets and the

[[Page 56035]]

risks to consumers presented in such markets.\73\
---------------------------------------------------------------------------

    \72\ See 12 U.S.C. 5512(c)(1).
    \73\ See 12 U.S.C. 5511(c)(3) (identifying as one of the 
``primary functions of the Bureau . . . collecting, researching, 
monitoring, and publishing information relevant to the functioning 
of markets for consumer financial products and services to identify 
risks to consumers and the proper functioning of such markets'').
---------------------------------------------------------------------------

    Likewise, the Bureau's rulemaking efforts will benefit from 
information about such orders, so that the Bureau might, for example, 
consider drafting rules to address identified consumer risks.\74\ The 
Bureau's consumer response function will be informed by increased 
monitoring of risks and trends, as the Bureau could direct resources or 
investigate risks in a certain area or on a certain topic.\75\ And the 
Bureau may choose to direct its consumer education efforts toward 
educating consumers about risks identified via the registry.\76\
---------------------------------------------------------------------------

    \74\ See 12 U.S.C. 5511(c)(5) (identifying as one of the 
``primary functions of the Bureau . . . issuing rules, orders, and 
guidance implementing Federal consumer financial law'').
    \75\ See 12 U.S.C. 5511(c)(2) (identifying as one of the 
``primary functions of the Bureau . . . collecting, investigating, 
and responding to consumer complaints''); see also Consumer Fin. 
Prot. Bureau, Consumer Response Annual Report: January 1-December 
31, 2021, at 5-8 (Mar. 2022), https://files.consumerfinance.gov/f/documents/cfpb_2021-consumer-response-annual-report_2022-03.pdf 
(describing the Bureau's consumer-complaint process and how the 
Bureau uses complaint information).
    \76\ See 12 U.S.C. 5511(c)(1) (identifying as one of the 
``primary functions of the Bureau . . . conducting financial 
education programs'').
---------------------------------------------------------------------------

    The information that the Bureau will obtain under the final rule 
will also be valuable to the Bureau in exercising its supervisory and 
enforcement functions.\77\ Among other things, the information may be 
informative when the Bureau makes determinations whether a covered 
person is engaging, or has engaged, in conduct that poses risk to 
consumers with regard to the offering or provision of consumer 
financial products or services under CFPA section 1024(a)(1)(C), such 
that the Bureau may determine to subject the covered person to Bureau 
supervision under that provision.\78\ The information contained in the 
registry may also be relevant in assessing civil penalties for 
violations of Federal consumer financial laws, given that Congress has 
provided that such penalties should take into account an entity's 
``history of previous violations'' and ``such other matters as justice 
may require.'' \79\
---------------------------------------------------------------------------

    \77\ See 12 U.S.C. 5511(c)(4) (identifying as one of the 
``primary functions of the Bureau . . . supervising covered persons 
for compliance with Federal consumer financial law, and taking 
appropriate enforcement action to address violations of Federal 
consumer financial law''). Part IV(D) and the section-by-section 
discussion of Sec.  1092.204 below contain additional discussion of 
how the final rule will facilitate the Bureau's supervisory efforts.
    \78\ See 12 U.S.C. 5514(a)(1)(C) (authorizing Bureau orders 
subjecting nonbanks to supervision based upon consumer complaints 
``or information from other sources''); 12 CFR part 1091 (Bureau 
procedural rule to establish supervisory authority over certain 
nonbank covered persons based on risk determination).
    \79\ See 12 U.S.C. 5565(c)(3)(D), (E). The Bureau may consider 
certain matters identified in orders collected under the final rule 
to be relevant under these provisions.
---------------------------------------------------------------------------

    Furthermore, there is a heightened likelihood that entities that 
are subject to public orders enforcing the law and relating to the 
offering or provision of consumer financial products and services may 
pose risks to consumers in the markets for those products and services, 
and risk of consumer harm is a significant factor that weighs heavily 
in the Bureau's decisions regarding the general allocation of its 
resources. Knowledge of whether a covered person has engaged in 
previous violations of consumer financial protection laws is valuable 
information that the Bureau considers when evaluating the risk of 
consumer harm. In the Bureau's experience, entities that have 
previously been subject to enforcement actions, including those brought 
by local, State, and other Federal authorities, present an increased 
risk of committing violations of laws subject to the Bureau's 
jurisdiction, and thus causing the additional consumer harm associated 
with such violations. Prior enforcement actions are also likely to be a 
good indication of continuing risks to consumers present in a 
particular market for consumer financial products or services. Because 
the orders that would be covered by the final rule are regularly 
issued, modified, and terminated, the Bureau needs to collect this 
information regularly and on a timely basis in order to stay abreast of 
developments.
    Although referrals from and other information provided by other 
agencies have been valuable to the Bureau's work, the Bureau currently 
often relies on other agencies to take proactive steps to contact it. 
As discussed in part IV(E) below, under the final rule, nonbanks that 
are subject to agency and court orders that are published on the NMLS 
Consumer Access website will have an option to notify the Bureau and 
provide information that will flag the relevant order and nonbank for 
the Bureau's attention. Having access to targeted information regarding 
relevant orders entered against nonbanks, whether such orders are 
listed on the Bureau's own registry or available through the NMLS, will 
significantly increase the Bureau's ability to monitor markets so that 
the Bureau can identify, better understand, and ultimately, prevent 
further consumer harm, particularly from repeat offenders.
    Recidivism--whether in the form of a company that repeatedly 
violates the law and as a result becomes subject to multiple orders, or 
in the form of a company that violates the orders to which it is 
subject--poses particular risks to consumers. Companies that repeatedly 
violate the law do more than just deprive consumers of protections in 
the marketplace; these companies may also charge their customers more 
in order to cover the costs of any fines or other costs resulting from 
the company's legal violations. In other words, consumers may end up 
subsidizing corporate malfeasance. When government orders fail to deter 
future misconduct by a company, that company's operations are more 
likely to present risk to consumers. Thus, the existence of multiple 
orders may be highly probative of heightened risks to consumers in the 
markets for consumer financial products and services, including the 
risk of noncompliance with laws subject to the Bureau's jurisdiction.
    Collecting information about such public orders across markets and 
agencies as provided in the final rule will improve the Bureau's 
efforts to determine where entities, either as a group or individually, 
are repeatedly violating the law. The Bureau particularly needs to be 
made aware of entities that become subject to multiple orders, or that 
are found to be out of compliance with existing orders, as well as of 
trends in such developments. Systematic or repeat violations of the law 
may indicate broader problems within a market for consumer financial 
products and services. Such problems might include lack of sufficient 
controls related to the offering and provision of certain consumer 
financial products and services, inadequate compliance management 
systems and processes within a set of market participants, and an 
unwillingness or inability of senior management at certain entities to 
comply with Federal consumer financial laws. The registry established 
in the final rule will provide a valuable mechanism to help ensure that 
the Bureau is rapidly made aware of such repeat offenders across a 
range of markets and enforcement agencies.
    The Bureau believes that the registry will be especially useful 
with respect to the particular nonbank markets that are subject to the 
Bureau's supervision and examination authority under CFPA section 
1024(a). In those markets, the Bureau will be able to take account of

[[Page 56036]]

risks identified through the registry in conducting its risk-based 
supervisory prioritization and enforcement work. The existence of an 
order that would require registration under the final rule would be 
probative of a potential need for supervisory examination, to the 
extent that the nonbank is subject to the Bureau's supervision and 
examination authorities. Under CFPA section 1024(b)(2), the Bureau is 
required to exercise its supervisory authority in a manner designed to 
ensure that such exercise, with respect to persons described in CFPA 
section 1024(a), is based on the assessment by the Bureau of the risks 
posed to consumers in the relevant product markets and geographic 
markets and taking into consideration the factors enumerated at CFPA 
section 1024(b)(2)(A)-(E).\80\
---------------------------------------------------------------------------

    \80\ 12 U.S.C. 5514(a), (b)(2).
---------------------------------------------------------------------------

    Depending upon the circumstances, the Bureau may consider the 
existence of an order requiring registration under the final rule to be 
a risk factor under these provisions for covered persons subject to the 
rule. CFPA section 1024(b)(2)(C) refers to ``the risks to consumers 
created by the provision of such consumer financial products or 
services.'' \81\ The existence of one or more orders that would require 
registration under the final rule would be probative of such risks to 
consumers because it indicates that an entity may not be willing or 
able to ensure compliance with the law. CFPA section 1024(b)(2)(D) 
provides that the Bureau shall also take into account ``the extent to 
which such institutions are subject to oversight by State authorities 
for consumer protection.'' \82\ The existence of one or more orders 
issued or obtained by the types of State agencies described in the 
final rule in connection with violations of law would provide important 
and directly relevant information regarding the extent to which 
nonbanks are subject to oversight by State authorities for consumer 
protection. CFPA section 1024(b)(2)(E) provides that the Bureau shall 
also take into account ``any other factors that the Bureau determines 
to be relevant to a class of covered persons.'' \83\ For the classes of 
covered persons subject to the final rule, the Bureau believes that the 
existence of an order that would require registration under the final 
rule would be a relevant factor under this statutory provision for the 
Bureau to take into consideration when exercising its supervisory 
authorities under CFPA section 1024. Thus, for the reasons described 
above, the existence of such orders would be relevant information in 
prioritizing and scoping the Bureau's supervisory activities under CFPA 
section 1024(b) with respect to the markets subject to that provision.
---------------------------------------------------------------------------

    \81\ 12 U.S.C. 5514(b)(2)(C).
    \82\ 12 U.S.C. 5514(b)(2)(D).
    \83\ 12 U.S.C. 5514(b)(2)(E).
---------------------------------------------------------------------------

    In crafting the final rule's requirements to register and submit 
certain agency and court orders, the Bureau has considered (among 
others) the factors listed at CFPA section 1022(c)(2), to the extent 
relevant here to the allocation of Bureau resources to perform market 
monitoring. For example, the Bureau considered the ``likely risks and 
costs to consumers associated with buying or using a type of consumer 
financial product or service.'' \84\ As discussed above, the Bureau 
believes companies that violate the law, especially repeatedly, 
generally pose more risk to consumers. The final rule will assist the 
Bureau in identifying and evaluating such risks--and their associated 
costs--across companies, industries, products, and regions.
---------------------------------------------------------------------------

    \84\ 12 U.S.C. 5512(c)(2)(A).
---------------------------------------------------------------------------

    The Bureau also considered the ``understanding by consumers of the 
risks of a type of consumer financial product or service.'' \85\ The 
Bureau is concerned that consumers currently may not adequately 
understand risks posed by certain institutions, including risks arising 
from recidivism. With a clear window into nationwide trends and gaps in 
nonbank covered persons' compliance with consumer protection laws, the 
Bureau can target its various functions--including consumer education--
to ensure that consumers understand the risks and associated costs of 
such conduct on their use of certain consumer financial products or 
services.
---------------------------------------------------------------------------

    \85\ 12 U.S.C. 5512(c)(2)(B).
---------------------------------------------------------------------------

    The Bureau further considered ``the legal protections applicable to 
the offering or provision of a consumer financial product or service, 
including the extent to which the law is likely to adequately protect 
consumers.'' \86\ The final rule will enhance the Bureau's ability to 
effectively assess whether and to what extent the orders themselves, as 
well as other relevant laws, in practice adequately protect consumers. 
Information collected in connection with the final rule will aid the 
Bureau in better understanding how effectively the nation's consumer 
protection laws operate in practice, which should assist the Bureau in 
determining (among other things) how best to allocate its resources to 
ensure consumers are adequately protected from unlawful conduct.
---------------------------------------------------------------------------

    \86\ 12 U.S.C. 5512(c)(2)(C).
---------------------------------------------------------------------------

    The Bureau also considered ``rates of growth in the offering or 
provision of a consumer financial product or service.'' \87\ Commenters 
expressed concern about a dearth of information regarding nonbank 
financial companies and stated that nonbanks may be obtaining an 
increased market share in certain markets for consumer financial 
products and services. The Bureau likewise believes that at least in 
certain markets, there has been rapid growth in consumer offerings by 
nonbanks. The Bureau intends to use the information obtained under the 
final rule in assessing and monitoring the rates of such growth and any 
associated risks, as evidenced by information regarding relevant 
consumer protection orders issued against nonbanks.
---------------------------------------------------------------------------

    \87\ 12 U.S.C. 5512(c)(2)(D).
---------------------------------------------------------------------------

    The Bureau also considered ``the extent . . . to which the risks of 
a consumer financial product or service may disproportionately affect 
traditionally underserved consumers.'' \88\ The Bureau generally is 
concerned that traditionally underserved communities may be 
disproportionately the target of consumer protection violations--
particularly, unfair, deceptive, or abusive acts or practices--in the 
offering or provision of consumer financial products or services. The 
information collected should provide the Bureau with robust nationwide 
data to identify and evaluate the extent to which this is the case.
---------------------------------------------------------------------------

    \88\ 12 U.S.C. 5512(c)(2)(E).
---------------------------------------------------------------------------

    Finally, the Bureau considered ``the types, number, and other 
pertinent characteristics of covered persons that offer or provide the 
consumer financial product or service.'' \89\ For the reasons 
discussed, law violator status--and especially repeat law violator 
status--is a highly pertinent characteristic. The Bureau believes that 
risks to consumers posed by law violators warrant market monitoring. In 
particular, it will provide greater visibility into nonbank covered 
persons' compliance with consumer protection laws in the offering or 
provision of consumer financial products and services, in addition to 
more generally aiding the Bureau's overall understanding of nonbank 
covered persons and the products or services they provide.
---------------------------------------------------------------------------

    \89\ 12 U.S.C. 5512(c)(2)(F).
---------------------------------------------------------------------------

    As discussed further below in part IV(E), the Bureau is adopting a 
modification to the proposed rule in order to provide an option for 
one-time registration of orders published on the NMLS Consumer Access 
website (except for orders issued or obtained by

[[Page 56037]]

the Bureau). The Bureau will be notified regarding such orders and the 
nonbank entities that are subject to them, and, using the information 
provided by the nonbank via the registry, will be able to obtain 
additional information from applicable Federal, State, and local 
authorities, including through the NMLS. Thus, the Bureau will have 
access to a comprehensive collection of relevant orders and entities, 
accessible either through the Bureau's registry or via the Bureau's 
existing access to NMLS and its ability to reach out to other agencies.
    The Bureau has concluded that alternative means of collecting the 
information subject to the final rule would be inadequate.\90\ For 
example, the Bureau considered requesting the information on an ad hoc 
basis from entities that are subject to relevant orders through a 
Bureau order issued pursuant to CFPA section 1022(c)(4)(B)(ii).\91\ 
However, the Bureau concludes this alternative would be inadequate. 
There is no existing comprehensive list of covered persons subject to 
Bureau regulation, so the Bureau would be unable to issue a standing 
order to such entities to produce information. It is not clear how the 
Bureau would obtain this information without issuing a rule. Also, the 
Bureau wishes to collect information that changes over time--for 
example, information regarding new orders and changes to orders, as 
well as with respect to changes in registration information. An order 
that required submission of information at a single point in time--
assuming that the Bureau could identify the entities to which such an 
order should be addressed--would be inadequate to capture such changes 
in information. While the Bureau might issue frequently recurring 
orders under its market-monitoring authority, such an approach would be 
less reliable and predictable for all parties than a rule-based 
approach.
---------------------------------------------------------------------------

    \90\ For additional discussion of comments received in 
connection with other alternative means of collecting this 
information, see the section-by-section discussion of Sec. Sec.  
1092.202(b) and 1092.203(a) below.
    \91\ 12 U.S.C. 5512(c)(4)(B)(ii).
---------------------------------------------------------------------------

    The Bureau further considered using its supervisory and examination 
authority to obtain information solely from entities that are subject 
to that authority. However, there is no existing comprehensive list of 
nonbank entities subject to Bureau supervision, so the Bureau would be 
unable to issue a standing order to such entities to produce such 
information. Moreover, the Bureau has concluded that collecting 
information from a wider range of covered persons, including those that 
are not subject to the Bureau's supervisory and examination authority, 
is appropriate to achieve its market-monitoring objectives.

C. Why the Bureau Has Identified Orders Issued Under the Types of Laws 
Described in the Proposal as Posing Particular Risk

    The final rule prescribes registration requirements with reference 
to certain types of ``covered laws'' that served as the basis for an 
applicable order. As discussed herein, the Bureau concludes that orders 
issued under the types of covered laws described in the proposal are 
likely to be probative of risks to consumers in the offering or 
provision of consumer financial products or services, including 
developments in markets for such products or services.\92\
---------------------------------------------------------------------------

    \92\ See also the discussion of the definition of the term 
``covered law'' in the section-by-section discussion of Sec.  
1092.201(c) below.
---------------------------------------------------------------------------

    First, the Bureau is requiring registration in connection with 
orders issued under the Federal consumer financial laws, to the extent 
that the violation of law found or alleged arises out of conduct in 
connection with the offering or provision of a consumer financial 
product or service. As explained above, numerous Federal and State 
agencies besides the Bureau have authority to enforce Federal consumer 
financial laws. In matters where an agency other than the Bureau has 
issued or obtained a final public order concluding that a covered 
person has violated Federal consumer financial law, the Bureau also 
will generally have jurisdiction over the conduct that resulted in that 
order. Requiring registration of such orders will facilitate effective 
market monitoring by providing the Bureau a tool to identify and 
understand the nature of the risks to consumers presented by the 
conduct addressed in those orders, including the risk that the conduct 
might continue unabated outside of the particular jurisdiction that 
issued the order. For example, such information may inform the Bureau's 
supervisory or enforcement activities, as the Bureau may consider 
bringing its own action in connection with the same or related conduct. 
Or the conduct may be probative of a more systemic problem with one or 
more entities' overall willingness or capacity to comply with Federal 
consumer financial law across different product lines or aspects of 
their operations. Likewise, requiring registration of orders involving 
Federal consumer financial law will facilitate effective market 
monitoring by ensuring that the Bureau can quickly and effectively 
identify patterns of similar conduct across multiple nonbank covered 
persons. The identification of such patterns may indicate a problem 
that the Bureau could best address by engaging in rulemaking to clarify 
or expand available consumer protections to address emerging consumer 
risk trends. It may also prompt the Bureau to use other tools, such as 
consumer education, to address the identified risks.
    Second, the Bureau is requiring registration of orders in 
connection with a violation of any other law as to which the Bureau may 
exercise enforcement authority, to the extent such violation arises out 
of conduct in connection with the offering or provision of a consumer 
financial product or service. The Bureau may enforce certain laws other 
than Federal consumer financial laws, as that term is defined in CFPA 
section 1002(14).\93\ The Bureau concludes that the registry should 
collect information regarding orders issued under any law that the 
Bureau may enforce, where the violation of law found or alleged arises 
out of conduct in connection with the offering or provision of a 
consumer financial product or service. By definition, the conduct 
addressed in such orders will generally fall within the scope of the 
Bureau's enforcement authority. More generally, the Bureau concludes 
that evidence of such conduct could be probative of a broader risk that 
the entity has engaged or will engage in conduct that may violate 
Federal consumer financial law. For example, violations of the Military 
Lending Act, as to which the Bureau has enforcement authority, may 
overlap with, or be closely associated with, violations of the CFPA's 
UDAAP prohibitions \94\ or the Truth in Lending Act,\95\ among other 
Federal consumer

[[Page 56038]]

financial laws. In addition, in the Bureau's experience, a violation of 
one law within the Bureau's enforcement authority may be indicative of 
broader inadequacies in an entity's compliance systems that are 
resulting or could result in other legal violations, including 
violations of Federal consumer financial laws. Furthermore, including 
in the registry orders issued under any law that the Bureau may enforce 
(where the violation of law found or alleged arises out of conduct in 
connection with the offering or provision of a consumer financial 
product or service) will further the Bureau's objective of creating a 
cross-market registry that could serve as a reference tool for use in 
monitoring for risks to consumers, thereby increasing the Bureau's 
ability to use the registry to monitor for patterns of risky conduct of 
nonbank covered persons across entities, industries, and product 
offerings.
---------------------------------------------------------------------------

    \93\ See, e.g., 10 U.S.C. 987(f)(6) (authorizing Bureau 
enforcement of the Military Lending Act). As the Bureau has 
explained in an interpretive rule, it also has authority to 
supervise nonbanks subject to its supervision regarding risks to 
consumers arising from conduct that violates the Military Lending 
Act. See Bureau Interpretive Rule, Examinations for Risks to Active-
Duty Servicemembers and Their Covered Dependents, 86 FR 32723 (June 
23, 2021). In this rulemaking, however, the Bureau does not need to 
rely on the authority described in that interpretive rule. Instead, 
to the extent that the final rule would collect information 
regarding orders issued under laws described in Sec.  1092.201(c)(2) 
for the purpose of facilitating the Bureau's supervisory activities, 
the Bureau would do so because the Bureau believes such orders may 
be probative of a broader risk that an entity has engaged or will 
engage in conduct that may violate Federal consumer financial law.
    \94\ 15 U.S.C. 5531, 5536(a)(1)(B).
    \95\ 15 U.S.C. 1601 et seq.
---------------------------------------------------------------------------

    Third, the Bureau is requiring registration in connection with 
orders issued under the prohibition on unfair or deceptive acts or 
practices under section 5 of the FTC Act, 15 U.S.C. 45, or any rule or 
order issued for the purpose of implementing that prohibition, to the 
extent that the violation of law found or alleged arises out of conduct 
in connection with the offering or provision of a consumer financial 
product or service. In matters where a government agency has reached a 
determination that an entity has violated section 5 of the FTC Act in 
connection with the offering or provision of a consumer financial 
product or service, the Bureau has reason to be concerned that the 
entity poses heightened risks to consumers in financial markets. For 
one thing, the conduct resulting in the order may have violated Federal 
consumer financial law. CFPA section 1031, for example, authorizes the 
Bureau to take action ``to prevent a covered person or service provider 
from committing or engaging in an unfair, deceptive, or abusive act or 
practice under Federal law in connection with any transaction with a 
consumer for a consumer financial product or service, or the offering 
of a consumer financial product or service.'' \96\ And CFPA section 
1036(a)(1)(B) provides that ``[i]t shall be unlawful'' for a covered 
person ``to engage in any unfair, deceptive, or abusive act or 
practice.'' \97\ Congress modeled the CFPA's prohibition of unfair or 
deceptive acts or practices after the similar prohibition in section 5 
of the FTC Act.\98\ Therefore, violations of FTC Act section 5 in 
connection with the provision or offering of a consumer financial 
product or service are highly probative of a heightened risk that UDAAP 
violations subject to the Bureau's jurisdiction have occurred or are 
occurring.
---------------------------------------------------------------------------

    \96\ 12 U.S.C. 5531(a).
    \97\ 12 U.S.C. 5536(a)(1)(B).
    \98\ See 15 U.S.C. 45; see also, e.g., Consumer Fin. Prot. 
Bureau v. ITT Educ. Servs., Inc., 219 F. Supp. 3d 878, 902-04 (S.D. 
Ind. 2015).
---------------------------------------------------------------------------

    Moreover, the high probative value of such orders is not simply a 
function of the likelihood that underlying conduct could violate 
Federal consumer financial law. The Bureau concludes that, where an 
entity has engaged in conduct prohibited under FTC Act section 5 in 
connection with offering or providing a consumer financial product or 
service, there is a significant risk that upon closer inspection of the 
entity's activities it has engaged in other acts or omissions that 
either violate Federal consumer financial law or otherwise present 
risks to consumers in the consumer financial markets. For example, 
inadequacies in compliance systems are not likely limited to a 
particular Federal or State consumer protection law, and compliance-
system inadequacies that result in FTC Act section 5 violations 
indicate a heightened risk of similar inadequacies related to the 
prevention of violations of Federal consumer financial laws. And, as 
described above, a registry of orders is particularly useful because a 
core purpose of the Bureau's monitoring efforts is to analyze patterns 
of risky conduct across entities, industries, product offerings, and 
jurisdictions. Such patterns would help the Bureau identify risks to 
consumers that warrant further action, such as more monitoring, 
increased supervisory attention in the case of supervised persons, 
regulation, or consumer education.
    Fourth, the Bureau is requiring registration in connection with 
orders issued under State laws prohibiting unfair, deceptive, or 
abusive acts or practices that are identified in appendix A to part 
1092, to the extent that the violation of law found or alleged arises 
out of conduct in connection with the offering or provision of a 
consumer financial product or service.\99\ State UDAP/UDAAP laws are 
generally modeled after--or otherwise prohibit conduct similar to that 
prohibited by--FTC Act section 5 or CFPA sections 1031 and 
1036(a)(1)(B).\100\ Therefore, violations of State UDAP/UDAAP law in 
connection with the provision or offering of a consumer financial 
product or service are similarly highly probative of a heightened risk 
that UDAAP violations subject to the Bureau's jurisdiction have 
occurred or are occurring. In addition, violations of State UDAP/UDAAP 
law may be probative of the existence of violations of other laws 
within the Bureau's jurisdiction.\101\
---------------------------------------------------------------------------

    \99\ The Bureau is adopting a final version of appendix A to 
part 1092 with certain changes to the version in the proposal. For a 
discussion of these changes to the proposal, see the section-by-
section discussion of Sec.  1092.201(c) below.
    \100\ 15 U.S.C. 45; 12 U.S.C. 5531. See Request for Information 
on Payday Loans, Vehicle Title Loans, Installment Loans, and Open-
End Lines of Credit, 81 FR 47781, 47783 (July 22, 2016) (``In the 
1960s, States began passing their own consumer protection statutes 
modeled on the [Federal Trade Commission] Act to prohibit unfair and 
deceptive practices.''); see also Cal. Fin. Code sec. 90009(c)(3) 
(providing that ``the term `abusive' shall be interpreted consistent 
with Title X of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010''); Michael Greenfield, Unfairness Under 
Section 5 of the FTC Act and Its Impact on State Law, 46 Wayne L. 
Rev. 1869, 1899 (2000) (noting that ``the state statutes actually 
were drafted and promoted by the Federal Trade Commission, which, 
one supposes, had a special interest in uniform, nationwide 
interpretation of the standards'').
    \101\ To take just one example, UDAAP violations in connection 
with debt-collection efforts may also violate the Fair Debt 
Collection Practices Act's prohibition against unfair, deceptive, or 
abusive debt-collection practices. See 15 U.S.C. 1692d-1692f.
---------------------------------------------------------------------------

    Obtaining a better understanding of entities' compliance with State 
UDAP/UDAAP laws will assist the Bureau in the assessment and detection 
of risks for the same general reasons described with respect to alleged 
or found violations of FTC Act section 5--namely, that (i) conduct that 
violates State UDAP/UDAAP prohibitions commonly also violates laws 
under the Bureau's jurisdiction; and (ii) the Bureau believes that 
evidence of such conduct may be highly probative of a broader risk that 
the entity has engaged or will engage in similar conduct that may 
violate laws within the Bureau's jurisdiction, either as a result of a 
willingness to violate such laws or a lack of sufficient protections in 
place to prevent violations. Registration of State UDAP/UDAAP orders 
will facilitate effective market monitoring by ensuring that the Bureau 
can quickly and effectively identify patterns of risky conduct across 
entities, industries, consumer financial product or service offerings, 
and jurisdictions. The Bureau could then decide which Bureau functions 
are best suited to address the consumer risks raised by the 
orders.\102\
---------------------------------------------------------------------------

    \102\ For discussion of the final rule's requirements with 
respect to State laws amending or otherwise succeeding a law 
identified in appendix A, and rules or orders issued by State 
agencies for the purpose of implementing State UDAP/UDAAP laws, see 
the section-by-section discussion of Sec.  1092.201(c) below.

---------------------------------------------------------------------------

[[Page 56039]]

D. Why the Bureau Is Requiring Supervised Nonbanks To Designate 
Attesting Executives and Submit Written Statements

    The final rule will also require certain entities that are subject 
to the Bureau's supervision and examination authority to annually 
submit a written statement signed by a designated attesting executive 
regarding each covered order to which they are subject. In the written 
statement, the attesting executive will be required to (i) generally 
describe the steps that the executive has undertaken to review and 
oversee the entity's activities subject to the applicable covered order 
for the preceding calendar year, and (ii) attest whether, to the 
executive's knowledge, the entity during the preceding calendar year 
has identified any violations or other instances of noncompliance with 
any of the obligations that were imposed in a public provision of the 
covered order by the applicable agency or court based on a violation of 
a covered law. The final rule further requires that the entity 
designate as the attesting executive for each covered order its 
highest-ranking duly appointed senior executive officer (or, if the 
entity does not have any duly appointed officers, the highest-ranking 
individual charged with managerial or oversight responsibility for the 
entity) whose assigned duties include ensuring the entity's compliance 
with Federal consumer financial law, who has knowledge of the entity's 
systems and procedures for achieving compliance with the covered order, 
and who has control over the entity's efforts to comply with the 
covered order. The Bureau intends to publish the name and title of that 
executive in the public registry.
    The Bureau concludes these requirements will serve two sets of 
distinct purposes relating to its exercise of its supervisory and 
examination authorities under CFPA section 1024.
    First, the Bureau concludes the final rule's requirements that 
certain supervised entities (which are referred to in the rule as 
``supervised registered entities'') designate attesting executives and 
provide written statements will facilitate the Bureau's supervision 
efforts, including its efforts to assess compliance with the 
requirements of Federal consumer financial law, obtain information 
about supervised entities' activities and compliance systems or 
procedures, and detect and assess risks to consumers and to markets for 
consumer financial products and services.\103\ As discussed, the 
existence of one or more covered orders involving a supervised 
registered entity already raises red flags regarding the entity's 
compliance with Federal consumer financial law and the overall risk 
posed by such entity to consumers in the offering or provision of 
consumer financial products and services. Submission of a written 
statement regarding either compliance or noncompliance with such an 
order will provide the Bureau with important additional information 
regarding risks to consumers that may be associated with the order and 
the applicable supervised registered entity's compliance systems and 
procedures. Covered orders frequently contain provisions aimed at 
ensuring an entity's future legal compliance, such as reporting 
requirements, recordkeeping requirements, and provisions requiring the 
entity to obtain the issuing agency's nonobjection before adopting or 
amending relevant policies and procedures. An entity's sustained 
compliance with such provisions may mitigate the continuing risks to 
consumers presented by the entity and thus reduce the potential need 
for current supervisory activities. By contrast, an entity's 
noncompliance with the terms of an order may indicate a heightened need 
for current supervisory activities. And if an entity is committing 
significant or repeated violations of a covered order, or it is failing 
to take appropriate steps to address such violations and prevent their 
recurrence, that may indicate that the entity lacks the protocols and 
institutional commitment necessary to ensure compliance with legal 
obligations aimed at protecting consumers and ultimately with the 
Federal consumer financial laws. Entities that fail to comply with 
orders enforcing the law may be at greater risk of violating one or 
more laws within the Bureau's jurisdiction. Submission of the proposed 
written statements will enable the Bureau to conduct additional 
supervisory reviews or to otherwise investigate the matter in order to 
identify any such violations and related risks.
---------------------------------------------------------------------------

    \103\ See 12 U.S.C. 5514(b)(1), (7)(A)-(B). As explained in the 
``legal authority'' section, 12 U.S.C. 5514(b)(7)(A) authorizes the 
Bureau to prescribe rules to facilitate Bureau supervision and the 
assessment and detection of risks to consumers, and 12 U.S.C. 
5514(b)(7)(B) authorizes the Bureau to require supervised registered 
entities to ``generate''--i.e., create--reports regarding their 
activities (including the required written statements) and then 
``provide'' them to the Bureau.
---------------------------------------------------------------------------

    As a result, the final rule's written statements will be 
particularly relevant when prioritizing the Bureau's supervisory 
activities under CFPA section 1024(b). As discussed above at part 
III(C) and below in the section-by-section discussion of Sec.  
1092.204, CFPA section 1024(b)(2) requires that the Bureau exercise its 
authority under CFPA section 1024(b)(1) in a manner designed to ensure 
that such exercise, with respect to persons described in section 
1024(a), is based on the assessment by the Bureau of certain identified 
risks.\104\ For the reasons discussed above, the final rule's written 
statements will inform the Bureau's risk-based prioritization of its 
supervisory program under CFPA section 1024(b)(2). The Bureau 
anticipates that the written statements would be particularly helpful 
in assessing, among other things, ``the risks to consumers created by 
the provision of . . . consumer financial products or services'' and 
``the extent to which such institutions are subject to oversight by 
State authorities for consumer protection.'' \105\
---------------------------------------------------------------------------

    \104\ 12 U.S.C. 5514(a), (b)(2).
    \105\ 12 U.S.C. 5514(b)(2)(C)-(D). See additional discussion of 
the factors for risk-based supervisory prioritization in part IV(B) 
above.
---------------------------------------------------------------------------

    The final rule's written-statement requirements also will improve 
the Bureau's ability to conduct its supervisory and examination 
activities with respect to the supervised nonbank, when it does choose 
to exercise its supervisory authority. The Bureau exercises its 
supervisory authority with respect to supervised nonbanks for certain 
purposes, including assessing compliance with the requirements of 
Federal consumer financial law, obtaining information about the 
activities and compliance systems or procedures of supervised nonbanks, 
and detecting and assessing risks to consumers and markets for consumer 
financial products and services.\106\ Assessing whether entities have 
adequate compliance management systems in place is a long-standing and 
standard component of the Bureau's examination process, and that 
assessment depends in part on understanding with whom certain 
responsibilities lie and how a compliance program is carried out.\107\ 
The Bureau concludes a supervised nonbank's written statements as 
required under the proposal will provide important information relevant

[[Page 56040]]

to all of these statutory purposes. As explained below, a supervised 
nonbank's failure to comply with a relevant order under a covered law 
could indicate that the entity more generally lacks the will or ability 
to comply with its legal obligations, including its obligations under 
Federal consumer financial law. Such noncompliance may also indicate 
that the entity generally lacks adequate compliance systems or 
procedures, which in turn would create risks to consumers and to the 
markets for consumer financial products and services that the entity 
participates in. Conversely, written statements indicating that the 
entity had not identified any instances of noncompliance with a 
relevant order would also provide the Bureau with similarly useful 
information about the entity's efforts to comply with such orders and 
the entity's compliance systems and procedures related to the entity's 
offering and provision of consumer financial products and services. 
Thus, in cases where the Bureau determines to exercise its supervisory 
authorities with respect to a supervised nonbank required to submit 
written statements under the proposal, the Bureau would expect those 
written statements to be of value in conducting its examination work. 
For example, the Bureau may use the written statements in determining 
what information to require from a supervised nonbank, in determining 
the content of supervisory communications and recommendations, or in 
making other decisions regarding the use of its supervisory 
authority.\108\
---------------------------------------------------------------------------

    \106\ 12 U.S.C. 5514(b)(1).
    \107\ See CFPB Supervision and Examination Manual at CMR 1 (``To 
maintain legal compliance, an institution must develop and maintain 
a sound compliance management system . . . that is integrated into 
the overall framework for product design, delivery, and 
administration across their entire product and service 
lifecycle.'').
    \108\ As explained below in the section-by-section discussion of 
Sec.  1092.204(e), the Bureau is requiring supervised registered 
entities to maintain records to support their written statements. 
That recordkeeping requirement will further facilitate the Bureau's 
supervisory and examination activities because it will ensure the 
availability of records for the Bureau to review regarding the 
matters addressed in the written statements.
---------------------------------------------------------------------------

    Second, the final rule's written-statement requirements will help 
ensure that supervised registered entities ``are legitimate entities 
and are able to perform their obligations to consumers.'' \109\ As 
discussed in part VIII below, the Bureau believes that most supervised 
registered entities subject to covered orders endeavor in good faith to 
comply with consumer protection laws and, accordingly, have put in 
place some manner of systems and procedures to help achieve such 
compliance. But the Bureau also expects that other supervised 
registered entities will not take their legal obligations seriously, 
including their obligations under Federal consumer financial law.\110\ 
The final rule's written-statement requirements will provide 
information that would help the Bureau assess in which category a 
particular entity falls. If, after reviewing a written statement, the 
Bureau concludes that an entity is not working in good faith to comply 
with its legal obligations, that conclusion might provide grounds for 
prioritizing the entity for supervisory examinations to assess its 
compliance with Federal consumer financial law. The Bureau expects that 
the risk of such increased supervisory scrutiny will provide an 
incentive for some entities to improve their compliance efforts so that 
they can submit a written statement that is less likely to result in 
increased scrutiny from the Bureau. Thus, by making it more difficult 
to quietly disregard the law, the Bureau concludes that the written-
statement requirement will likely motivate at least a few supervised 
entities with substandard compliance practices to enhance their 
compliance efforts and comply with their legal obligations, including 
their obligations under Federal consumer financial law. The Bureau 
likewise believes that the final rule's requirement to designate an 
attesting executive with knowledge of the entity's systems and 
procedures for achieving compliance with the covered order and with 
control over the efforts to comply with the covered order will likely 
provide an incentive to pay more attention to the entity's legal 
obligations.
---------------------------------------------------------------------------

    \109\ 12 U.S.C. 5514(b)(7)(C). As explained in the ``legal 
authority'' section above, 12 U.S.C. 5514(b)(7)(A), (B), and (C) 
provide independent sources of rulemaking authority.
    \110\ As explained above, in several cases, the Bureau has found 
that entities have violated prior orders that the Bureau has issued 
or obtained. See supra note 7.
---------------------------------------------------------------------------

    To be clear, the final rule does not establish any minimum 
procedures or otherwise specify the steps the attesting executive must 
take in order to review and oversee the supervised registered entity's 
activities. Nor does the final rule establish any minimum level of 
compliance management or expectation for compliance systems and 
procedures at such entities, or purport to impose any restrictions on 
the manner in which supervised registered entities address such 
matters. However, as explained above, the Bureau expects that most 
supervised registered entities will be at least somewhat hesitant to 
repeatedly report the absence of good faith efforts to comply with 
covered orders. Also, the rule will require supervised registered 
entities to identify, on an annual basis, a high-level executive with 
knowledge and responsibility regarding an entity's efforts to comply 
with a covered order, which will facilitate any Bureau supervisory 
efforts related to the order or the matters addressed therein.
    The Bureau is finalizing its preliminary findings that requiring 
certain supervised nonbanks to designate attesting executives and to 
submit written statements relating to compliance with reported orders 
will facilitate the Bureau's supervisory efforts and better ensure that 
supervised registered entities are legitimate entities and are able to 
perform their obligations to consumers.

E. Why the Bureau Is Adopting an Option for One-Time Registration of 
Orders Published on the NMLS Consumer Access Website

    The Bureau received multiple comments on the proposal stating that 
the proposed registry was redundant with existing registries and other 
published information, and in particular with the NMLS. See the 
section-by-section analysis of Sec.  1092.203 below for a discussion of 
these comments and the Bureau's response. Some consulting parties 
expressed similar concerns during the Bureau's interagency consultation 
process, as discussed in part V below. In light of those comments and 
concerns, the Bureau is adopting a one-time registration option for 
orders that are published on the NMLS Consumer Access website, which 
may be exercised at the election of the covered nonbank. Nonbanks that 
exercise this option may submit a one-time registration regarding 
certain agency and court orders that are published on the NMLS Consumer 
Access website maintained at www.NMLSConsumerAccess.org (except for 
orders issued or obtained by the Bureau), in lieu of complying with 
other requirements of the rule with respect to the order. Such nonbanks 
will be required to submit certain limited information to the Bureau's 
nonbank registry regarding the order to enable the Bureau to identify 
the relevant nonbank and order and otherwise coordinate the nonbank 
registry with the NMLS. Upon exercising this option and submitting the 
required information about the relevant order, a nonbank will have no 
further obligation under subpart B to provide information to, or update 
information provided to, the Bureau's nonbank registry regarding the 
order.
    The one-time registration option established in the final rule will 
ensure that the Bureau is informed regarding risks to consumers in the 
offering or provision of consumer financial products and services, 
including developments in markets for such

[[Page 56041]]

products and services, in a manner that promotes coordination and 
cooperation with the States while reducing potential burden on the 
companies that are required to register. This option is not available 
for orders that are issued or obtained at least in part by the Bureau 
itself.
    The one-time registration option is consistent with Sec.  
1092.102(b), which provides that in administering the nonbank registry, 
the Bureau may rely on information a person previously submitted to the 
nonbank registry under part 1092 and may coordinate or combine systems 
in consultation with State agencies as described in CFPA sections 
1022(c)(7)(C) and 1024(b)(7)(D). Those statutory provisions provide 
that the Bureau shall consult with State agencies regarding 
requirements or systems (including coordinated or combined systems for 
registration), where appropriate. As Sec.  1092.102(b) makes clear, the 
Bureau may develop or rely on such systems as part of maintaining the 
nonbank registry and may also rely on previously submitted information.

F. Why the Bureau Intends To Publish Certain Information Collected 
Under the Registration Requirements

    The Bureau intends to publish a registry that contains certain 
information about nonbanks and orders collected under the rule. 
However, the Bureau is reserving the option not to publish information 
based on operational considerations, such as resource constraints.\111\
---------------------------------------------------------------------------

    \111\ For additional discussion regarding the Bureau's 
discretion not to publish information under Sec.  1092.205(a), see 
the section-by-section discussion of that provision below.
---------------------------------------------------------------------------

    While the orders subject to the rule will already be public, 
information about the orders may not be readily accessible in a 
comprehensive and collected manner, and some of the information 
submitted to the registry may not be readily available to the public. 
The Bureau intends to publish this information because it believes 
publication will provide benefits to the general public, other 
regulators, and to consumers, and would be consistent with Federal 
Government efforts to make government data assets publicly 
available.\112\ The Bureau has authority to publish the registration 
information under CFPA section 1022(c)(3)(B), which authorizes it to 
publish information obtained under section 1022 ``as is in the public 
interest,'' \113\ and under CFPA section 1022(c)(7)(B), which 
authorizes the Bureau to ``publicly disclose registration information 
to facilitate the ability of consumers to identify covered persons that 
are registered with the Bureau.'' \114\ As discussed further in the 
section-by-section discussion of Sec.  1092.205(a) below, the Bureau 
finds that, except under certain circumstances, it will be in the 
public interest to publish certain information collected by the nonbank 
registry.
---------------------------------------------------------------------------

    \112\ See also the discussion of these issues in the section-by-
section discussion of Sec.  1092.205 below.
    \113\ 12 U.S.C. 5512(c)(3)(B).
    \114\ 12 U.S.C. 5512(c)(7)(B).
---------------------------------------------------------------------------

    A variety of Federal regulators, including the prudential 
regulators, as well as State attorneys general and other State 
agencies, all have authority to issue orders to address legal 
violations in the provision or offering of consumer financial products 
or services. Consequently, similar conduct may be addressed through 
separate orders, by separate regulators, or across separate lines of 
business. Again, the orders that would be published under the proposal 
would already be public. But such orders, while public, are currently 
subject to distinct publication regimes. The distinct enforcement and 
publication regimes for the various agencies with authority over 
nonbank covered persons make it more difficult for the Bureau, 
consumers, and other interested parties to identify entities that 
engage in misconduct and repeatedly violate the law. The final rule 
will address that issue by creating a registry of orders that relate to 
offering or providing consumer financial products or services and the 
nonbanks that are subject to them. The registry will enable users of 
the nonbank registry to become better informed about those orders and 
nonbanks and promote transparency in the markets for consumer financial 
products and services.
    The Bureau recognizes that much public information about such 
orders already exists. In particular, some information is available to 
potential users through the NMLS Consumer Access website, which is 
owned and operated by the State Regulatory Registry LLC, which is a 
wholly owned subsidiary of the Conference of State Bank Supervisors. In 
addition, the applicable Federal and State regulators generally each 
publish their own orders enforcing consumer financial law; thus, 
potential users may be able to access some of this information by means 
of the various websites and other databases maintained by individual 
agencies or other multiagency websites. And still other information is 
published and maintained by private actors.
    As discussed in part IV(E) above and in the section-by-section 
discussion of Sec.  1092.203 below, the Bureau is adopting a one-time 
registration option with respect to orders that are published on the 
NMLS Consumer Access website, www.NMLSConsumerAccess.org (except for 
orders issued or obtained by the Bureau). This option will reduce 
burden on eligible entities that are subject to the rule, help avoid 
confusion, and promote coordination with the States in exercising the 
Bureau's nonbank registration authorities by leveraging information 
already gathered and published by the States. The Bureau intends to 
publish certain limited information collected under this one-time 
registration option for the purposes of informing users of the registry 
of particular orders published on the NMLS Consumer Access website and 
the applicable nonbanks subject to them. The Bureau's registry will 
alert users of the NMLS that orders have been issued against nonbanks 
subject to the Bureau's jurisdiction in connection with the offering or 
provision of consumer financial products or services. Where an order 
has been registered with the Bureau's registry under the option 
discussed in part IV(E) above, users may also refer to the NMLS for 
additional information about that order, to the extent consistent with 
any terms of use or other conditions of access that the NMLS's operator 
may impose.
    The Bureau is authorizing the establishment of its own public 
registry in order to provide access to a new centralized and publicly 
available database containing information about applicable nonbanks and 
the orders to which they are subject, specifically in connection with 
the offering and provision of consumer financial products and services. 
While certain State regulators provide information about certain public 
enforcement actions through the NMLS, including in some cases 
publishing related orders on the NMLS Consumer Access website, such 
information does not extend to all of the orders and all of the 
agencies that are addressed by the final rule, including orders issued 
by Federal agencies. It is also limited to only certain industry 
sectors. Therefore, there appears to be limited collective information 
regarding all of the orders that have been issued by multiple 
regulators to particular entities across multiple product markets and 
geographic markets related to consumer financial products and services. 
To the Bureau's knowledge, there is currently no public government 
registry at the Federal or State level for the collection

[[Page 56042]]

of information about such orders across the entities subject to the 
Bureau's jurisdiction (though privately maintained databases may 
exist). No government agency appears to maintain a publicly available 
repository of such orders and other related information with respect to 
particular entities as they relate to consumer financial products and 
services. The Bureau believes that consumers would benefit from a 
registry that is maintained by the Federal Government for the purpose 
of providing information regarding such orders.
    The Bureau believes that there will be significant value in 
creating a public repository of information related to public agency 
and court orders that impose obligations based on violations of 
consumer protection laws, and the nonbanks under the Bureau's 
jurisdiction that are subject to them.\115\ Publication of certain data 
collected pursuant to this rule is in the public interest in a variety 
of ways. By improving public transparency, the Bureau intends to 
mitigate recidivism and more effectively deter unlawful behavior. 
Providing better tools to monitor repeat law violators and corporate 
recidivism is in the public interest. Researchers will be able to use 
published information to better understand the markets regulated by the 
Bureau and the participants in those markets, and their efforts may 
result in more thorough understanding and promote compliance with the 
law. Non-government entities will likewise be able to use published 
information in conducting their work and in identifying potential 
issues and risks affecting consumers in the markets for consumer 
financial protection and services. Industry can use a public registry 
as a convenient source of information regarding regulator actions and 
trends across jurisdictions, helping industry actors to better 
understand legal risks and compliance obligations. A public registry 
will also provide potential investors, contractual partners, financial 
firms, and others that are conducting due diligence on a registered 
nonbank a consolidated source of information regarding public orders. 
Establishing a source for public data on entity lawbreaking and 
recidivism will promote tracking and awareness of such matters by 
consumer groups, trade associations, firms conducting due diligence, 
the media, and other parties.
---------------------------------------------------------------------------

    \115\ See also the discussion of these issues in the section-by-
section discussions of Sec. Sec.  1092.202(b) and 1092.205(a) below.
---------------------------------------------------------------------------

    Government agencies--including, but not limited to, the Bureau--
will also benefit from the public registry. While the orders that the 
Bureau intends to publish under the rule will already be public, every 
Federal, State, and local agency with jurisdiction over a covered 
nonbank will benefit from access to a regularly maintained database 
providing up-to-date information on relevant public orders that have 
been issued against such entities. Such information will help agencies 
to detect risks to consumers, and to coordinate and maintain 
consistency with the Bureau and other agencies in their enforcement 
strategies and approaches. Agencies can use the published information 
to better identify registered nonbanks and determine their legal 
structure and organization, since the registry will (subject to the 
option for NMLS-published covered orders) require registered nonbanks 
to submit and maintain up-to-date identifying information, including 
legal name and principal place of business. Also, publication of 
registration information and information regarding orders will assist 
other agencies in assessing the potential risks to consumers that may 
be posed by registered nonbanks and in making their own determinations 
regarding whether to conduct examinations or investigations, bring 
enforcement actions against nonbanks, or engage in other regulatory 
activities. For example, a State regulator attempting to improve its 
assessments of consumer risk trends among nonbank payday lenders in its 
State should be able to use the Bureau's registry to identify what 
other regulators of the same or similar nonbank providers or products 
have recently identified in terms of such risks. In addition, the 
Bureau believes that many agencies would find the published information 
useful in making other determinations regarding the nonbanks registered 
under the proposal. For example, an agency may be able to use this 
information when making determinations regarding an application or 
license, or to ask relevant questions regarding the information that is 
published. Thus, the Bureau believes that, with access to a public 
Bureau registry of these orders, those similarly tasked with protecting 
consumers in the markets for consumer financial products and services 
would obtain many of the same powerful market-monitoring benefits that 
the Bureau anticipates obtaining from this rule.\116\
---------------------------------------------------------------------------

    \116\ As described in part V below, certain consulting parties 
confirmed to the Bureau during the interagency consultation process 
that they would find the registry useful in conducting their own 
operations, while certain other consulting parties stated that they 
would not.
---------------------------------------------------------------------------

    In developing the proposal, the Bureau considered whether it might 
be better to use confidential channels, or perhaps a private electronic 
portal, to exchange this information with other government agencies. 
However, the Bureau believes that such an approach likely would be 
impractical. Not every agency that would be able to use the information 
would be aware of the need to request access to the information from 
the Bureau or would necessarily be able to expend the resources to 
maintain access. The Bureau would need to expend its own resources to 
establish and maintain such channels. And the Bureau believes that such 
a system would not achieve the benefits of disclosure to consumers and 
the public discussed in this section. Publication also would formally 
align the proposed registry with Federal Government standards calling 
for publishing information online as open data.\117\
---------------------------------------------------------------------------

    \117\ See, e.g., Open, Public, Electronic, and Necessary 
Government Data Act, in title II of Public Law 115-435 (Jan. 14, 
2019).
---------------------------------------------------------------------------

    Consumers may also benefit from the collection and publication of 
the information collected by the registry, including information about 
orders that are already public. At least in certain cases, publishing 
information about the entity and its applicable orders in a public 
registry as intended by the Bureau will potentially help certain 
consumers make informed decisions regarding their choice of consumer 
financial products or services. As discussed at part VIII below, the 
Bureau does not necessarily expect a wide group of consumers to rely 
routinely on the Bureau's registry when selecting consumer financial 
products or services. However, the Bureau believes that the registry 
will benefit certain consumers if the information in the registry is 
recirculated, compiled, or analyzed by other users such as consumer 
advocacy organizations, researchers, or the media. For example, media 
outlets can use the registry to report which entities have the most 
government orders enforcing the law against them, which would inform 
consumers about such repeat offenders.
    Publication of the registry as intended by the Bureau will also 
facilitate private enforcement of the Federal consumer financial laws 
by consumers, to the extent those laws provide private rights of 
action, where consumers have been harmed by a registered nonbank. Such 
publication will be useful in helping consumers understand the identity 
of a company that has offered or provided a particular consumer 
financial product or service, and in determining whether to file suit 
or otherwise make choices

[[Page 56043]]

regarding how to assert their legal rights. And availability of this 
information could lead consumers and other persons to report to the 
Bureau instances of similar conduct for the Bureau to investigate.
    Under the final rule, the Bureau will not publish the written 
statement submitted by a supervised registered entity but will instead 
treat the written statement as Bureau confidential supervisory 
information subject to the provisions of its rule on the disclosure of 
records and information at 12 CFR part 1070. The Bureau does intend to 
publish the name and title of the attesting executive(s) submitted by 
the supervised registered entity. The Bureau intends to disclose this 
name and title information because it concludes that, except as 
described in the section-by-section discussion of Sec.  1092.205 below, 
publication of this information will be in the public interest. In 
particular, it will help ensure accountability at the entity for 
noncompliance. The Bureau concludes that the publication of the 
executive's name and title will provide an incentive to pay more 
attention to covered orders. The Bureau believes that designating an 
attesting executive will prompt that executive to focus greater 
attention on ensuring the entity's compliance with a covered order, and 
in turn increase the likelihood of compliance. Publication of this 
designation as intended by the Bureau will increase the likelihood of 
these effects. Such publication of the designation will identify for 
other regulators (and the general public) the highest-ranking executive 
at the supervised registered entity who has control over the entity's 
efforts to comply with the covered order and otherwise satisfies the 
rule's designation requirements. Just as the possibility of Bureau 
scrutiny of the attesting executive's conduct is likely to motivate the 
executive to devote greater attention to compliance efforts, the 
additional scrutiny from others outside the Bureau will further promote 
compliance. Publishing the attesting executive's name and title thus 
dovetails with the supervisory goals discussed above in part IV(D).
    Publishing the name and title of the executive who has knowledge 
and control of the supervised entity's efforts to comply with the 
covered order, as intended by the Bureau, will benefit users of the 
registry in other ways. For example, publishing this information may 
help certain consumers better understand and monitor the conduct of the 
entities with whom they do business, including how the company assigns 
responsibility for compliance with Federal consumer financial law. 
Researchers, media, and other users of the information may be able to 
detect trends or patterns associated with such information. Publication 
as intended by the Bureau may also help whistleblowers and consumers 
better understand the operations and structure of the supervised 
entity, such as to which department or division of the company to 
direct whistleblowing complaints, information about violations, or 
requests for information with respect to the covered order in order to 
ensure that their complaint, information, or request is being sent to 
the appropriate part of the organization. Clients or other companies 
that do business with the entity will also have a better understanding 
of which areas of the company are affected by a covered order and who 
is responsible for compliance with it.
    Publishing such name and title information will also facilitate 
coordination and communication regarding the order between the Bureau, 
other government agencies, and the nonbank entity. Other regulators, 
especially those that have issued orders regarding the supervised 
entity, would likely benefit from understanding which executive(s) have 
been tasked with ensuring compliance with their orders. And disclosure 
of this information would increase transparency regarding how the 
Bureau processes and verifies information submitted as part of the 
registry.

V. Summary of Rulemaking Process

A. Consultation With Other Agencies in Exercising the Authorities 
Relied Upon in the Proposal and Final Rule

    One of the authorities cited as a basis for components of the 
Bureau's proposed rule and final rule is CFPA section 1022(c)(7), which 
provides that the ``Bureau may prescribe rules regarding registration 
requirements applicable to a covered person, other than an insured 
depository institution, insured credit union, or related person.'' 
\118\ Congress provided that ``[i]n developing and implementing 
registration requirements under [section 1022(c)(7)], the Bureau shall 
consult with State agencies regarding requirements or systems 
(including coordinated or combined systems for registration), where 
appropriate.'' \119\ CFPA section 1024(b)(7)--the statutory basis for 
the written-statement requirement--includes a similar consultation 
provision.\120\
---------------------------------------------------------------------------

    \118\ 12 U.S.C. 5512(c)(7)(A).
    \119\ 12 U.S.C. 5512(c)(7)(C).
    \120\ 12 U.S.C. 5514(b)(7)(D) (``In developing and implementing 
requirements under this paragraph, the Bureau shall consult with 
State agencies regarding requirements or systems (including 
coordinated or combined systems for registration), where 
appropriate.'').
---------------------------------------------------------------------------

    Accordingly, the Bureau has consulted with State agencies, 
including State agencies involved in supervision of nonbanks and State 
agencies charged with law enforcement, in crafting the proposal's and 
final rule's registration requirements and system. In developing the 
proposal and this final rule, the Bureau considered the input it 
received from State agencies, including concerns expressed regarding 
possible duplication between any registration system the Bureau might 
build and existing registration systems.
    In addition, before proposing a rule under the Federal consumer 
financial laws, including CFPA sections 1022(b)-(c) and 1024(b), and 
during the applicable comment process, the Bureau must consult with 
appropriate prudential regulators or other Federal agencies regarding 
consistency with prudential, market, or systemic objectives 
administered by such agencies.\121\ In developing the proposal and this 
final rule, the Bureau consulted with prudential regulators and other 
Federal agencies and considered the input it received.
---------------------------------------------------------------------------

    \121\ 12 U.S.C. 5512(b)(2)(B) (``In prescribing a rule under the 
Federal consumer financial laws . . . the Bureau shall consult with 
the appropriate prudential regulators or other Federal agencies 
prior to proposing a rule and during the comment process regarding 
consistency with prudential, market, or systemic objectives 
administered by such agencies . . . .'').
---------------------------------------------------------------------------

    The Bureau also consulted with Tribal governments regarding this 
rulemaking pursuant to CFPA sections 1022(c)(7)(C) and 
1024(b)(7)(D).\122\ In addition, the Bureau consulted with tribal 
governments in accordance with applicable Bureau policy.\123\ In 
developing this final rule, the Bureau considered the input of Tribal 
governments, including concerns tribal governments expressed regarding 
maintaining Tribal sovereignty.
---------------------------------------------------------------------------

    \122\ See 12 U.S.C. 5512(c)(7)(C), 5514(b)(7)(D) (requiring 
consultation with ``State agencies''); see also 12 U.S.C. 5481(27) 
(term ``State'' includes ``any federally recognized Indian tribe, as 
defined by the Secretary of the Interior under'' 25 U.S.C. 5131(a)).
    \123\ See Consumer Fin. Prot. Bureau, Policy for Consultation 
with Tribal Governments, https://files.consumerfinance.gov/f/201304_cfpb_consultations.pdf.
---------------------------------------------------------------------------

    Each of the Bureau's outreach efforts is discussed in turn below.

B. Pre-Proposal Outreach

    The Bureau received feedback from external stakeholders in 
developing the

[[Page 56044]]

notice of proposed rulemaking. The following is a summary of that 
effort.
1. State Agencies and Tribal Governments
    As required by CFPA sections 1022(c)(7) and 1024(b)(7),\124\ the 
Bureau consulted with State agencies and Tribal governments, including 
agencies involved in supervision of nonbanks and agencies charged with 
law enforcement, in crafting the proposed registration requirements and 
registry. Among other meetings, the Bureau's consultation efforts 
included presentations to State and Tribal governments on October 13, 
October 20, October 27, November 3, November 10, November 17, and 
November 21, 2022, explaining proposals then under consideration and 
requesting feedback. In addition, on October 31, 2022, Bureau staff met 
with State financial regulators and staff of the Conference of State 
Bank Supervisors to discuss technical questions to better understand 
whether and how the Bureau could combine or coordinate its proposed 
registry with the NMLS.\125\ In developing its proposed rule, the 
Bureau considered the input it received from State agencies and Tribal 
governments. This input included concerns State agencies expressed 
regarding possible duplication between any registration system the 
Bureau might build and existing registration systems. This input also 
included concerns Tribal governments expressed regarding maintaining 
Tribal sovereignty.
---------------------------------------------------------------------------

    \124\ 12 U.S.C. 5512(c)(7)(C); 12 U.S.C. 5514(b)(7)(D).
    \125\ In addition to the listed meetings, the Bureau 
participated in other meetings with one or more representatives of 
State financial regulators regarding the Bureau's proposed registry, 
including meetings in August and September 2022.
---------------------------------------------------------------------------

2. Federal Regulators
    Before proposing a rule under the Federal consumer financial laws, 
including CFPA sections 1022(c) and 1024(b), the Bureau must consult 
with appropriate prudential regulators or other Federal agencies 
regarding consistency with prudential, market, or systemic objectives 
administered by such agencies.\126\ In developing this proposal, the 
Bureau consulted with prudential regulators and other Federal agencies 
and considered the input it received.
---------------------------------------------------------------------------

    \126\ 12 U.S.C. 5512(b)(2)(B).
---------------------------------------------------------------------------

C. Notice of Proposed Rulemaking

    On December 12, 2022, the Bureau issued its proposed rule to 
establish a public registration system for nonbank covered persons 
subject to certain agency and court orders. The proposal was published 
in the Federal Register on January 30, 2023, and the public comment 
period closed on March 31, 2023.\127\ The Bureau received more than 60 
comments on the proposal during the comment period. Commenters included 
individual consumers, consumer advocate commenters, tribes, the U.S. 
Small Business Administration Office of Advocacy (SBA Office of 
Advocacy), industry, and others, including a joint comment letter from 
State regulators.
---------------------------------------------------------------------------

    \127\ 88 FR 6088 (Jan. 30, 2023).
---------------------------------------------------------------------------

    In addition, the Bureau also received three ex parte 
communications, one from a journalist commenter, one from a consumer 
advocate commenter, and another from an industry commenter.\128\ 
Summaries of those ex parte communications are available on the public 
docket for this rulemaking.\129\ The Bureau also received a joint 
comment letter from Members of Congress related to the proposed rule, 
which is also available on the public docket.
---------------------------------------------------------------------------

    \128\ See CFPB, Policy on Ex Parte Presentations in Rulemaking 
Proceedings, 82 FR 18687 (Apr. 21, 2017).
    \129\ See https://www.regulations.gov/docket/CFPB-2022-0080.
---------------------------------------------------------------------------

    Relevant information received via comment letters, as well as ex 
parte submissions, is discussed above in part IV, as well as the 
section-by-section analysis and subsequent parts of this document, as 
applicable. The Bureau considered all comments it received regarding 
the proposal, made certain modifications, and is adopting the final 
rule set forth herein. Comments regarding the Bureau's impact analyses 
are discussed in parts VIII and IX below.

D. Further Outreach

    Before finalizing a proposed rule under the Federal consumer 
financial laws, including CFPA sections 1022(c) and 1024(b), the Bureau 
must consult with appropriate prudential regulators or other Federal 
agencies regarding consistency with prudential, market, or systemic 
objectives administered by such agencies.\130\ In developing this final 
rule, the Bureau consulted with prudential regulators and other Federal 
agencies and considered the input it received.
---------------------------------------------------------------------------

    \130\ 12 U.S.C. 5512(b)(2)(B).
---------------------------------------------------------------------------

    As required by CFPA sections 1022(c)(7) and 1024(b)(7),\131\ the 
Bureau also consulted with State agencies and Tribal governments, 
including agencies involved in supervision of nonbanks and agencies 
charged with law enforcement, in crafting the registration requirements 
and system.\132\ Among other meetings, the Bureau's consultation 
efforts included presentations to State agencies and Tribal governments 
on February 21, 22, and 23, 2024, explaining proposals then under 
consideration and requesting feedback, as well as a meeting between 
representatives of the Bureau and State agencies on April 18, 2024. In 
developing the final rule, the Bureau considered the public comments it 
received from tribes and via a joint comment letter from State 
regulators, as well as the input it received from State agencies and 
Tribal governments during the consultation process.
---------------------------------------------------------------------------

    \131\ 12 U.S.C. 5512(c)(7)(C); 12 U.S.C. 5514(b)(7)(D).
    \132\ As explained above, during the rulemaking process for 
issuing rules under the Federal consumer financial laws, Bureau 
policy is to consult with appropriate Tribal governments. See 
https://files.consumerfinance.gov/f/201304_cfpb_consultations.pdf.
---------------------------------------------------------------------------

    In interagency consultations, several consulting parties reasserted 
issues that had been raised in the comment letters. Those comments are 
addressed elsewhere in the applicable sections of this preamble.
    Consistent with an approach suggested by commenters, including in a 
joint comment letter submitted by a group of State regulators, the 
Bureau is adopting a one-time registration option for nonbanks to 
submit certain information about orders published on the NMLS Consumer 
Access website (except for orders issued or obtained by the Bureau), in 
lieu of complying with the other requirements of the rule with respect 
to such orders.\133\
---------------------------------------------------------------------------

    \133\ See part IV(E) and the section-by-section discussion of 
Sec.  1092.203 below.
---------------------------------------------------------------------------

    Consulting partners also raised certain additional issues that the 
Bureau addresses in this section. During consultation, some consulting 
parties expressed concerns with aspects of the final rule and stated 
that they would not use the information collected by the Bureau and 
potentially published as provided in the rule.\134\ However, other 
consulting parties expressed general support for the Bureau's adoption 
of the final rule, and confirmed to the Bureau during the interagency 
consultation process that they would find the registry useful in 
conducting their own operations.
---------------------------------------------------------------------------

    \134\ For further discussion regarding the final rule's approach 
to authorizing publication of registry information by the Bureau, 
including the ability of other agencies to use such information, see 
part IV(F) and the section-by-section discussion of Sec.  1092.205 
below.
---------------------------------------------------------------------------

    The Bureau satisfied all applicable statutory requirements with 
respect to interagency consultations, including CFPA sections 
1022(c)(7) and

[[Page 56045]]

1024(b)(7). As described in this section, the Bureau engaged in oral 
and written discussions with State regulators as it developed the 
proposal, during the notice-and-comment process, and before finalizing 
the rule. Throughout the consultation process, it has solicited the 
views of State regulators regarding the combination and coordination of 
systems as well as other matters relating to both the proposal and the 
final rule. Some consulting parties sought further engagement with the 
Bureau on aspects of the rulemaking, which the Bureau granted.
    The Bureau also offered the States an opportunity to give specific, 
concrete feedback on the proposed registry, including providing 
feedback regarding how that system might be combined or further 
coordinated with other registration systems, as contemplated by CFPA 
sections 1022(c)(7)(C) and 1024(b)(7)(D).
    Certain consulting parties raised questions about the one-time 
registration option for NMLS-published covered orders in Sec.  
1092.203, stating that any final rule should strike reporting and 
registration requirements for any violations of State consumer 
financial laws, rules, and agency orders. As discussed in part IV(E) 
above and the section-by-section discussion of Sec.  1092.203 below, 
the Bureau concluded that the option provided under Sec.  1092.203 is 
an appropriate means of furthering the purposes of the final rule, 
including the final rule's provisions restricting the availability of 
that option to ``NMLS-published covered orders'' as that term is 
defined at Sec.  1092.201(k). For discussion of the application of the 
final rule to State laws and orders, see the section-by-section 
discussions of Sec.  1092.201(c) and (d) below.
    Certain consulting parties urged the Bureau to exempt from its rule 
any nonbank entity meeting the Small Business Administration's 
definition of ``small business'' because, in the consulting parties' 
view, the rule would be overly expansive and particularly burdensome 
for small nonbank entities not subject to Bureau supervision. As 
explained in parts VIII and IX below, however, the Bureau has 
determined that the rule will not impose significant burdens on a 
substantial number of small entities. The Bureau thus declines to 
exempt all small businesses from the rule's requirements. As explained 
below, however, entities with less than $5 million in annual receipts 
resulting from offering or providing all consumer financial products 
and services described in CFPA section 1024(a) \135\ are not subject to 
the requirements imposed in Sec.  1092.204 of the rule.
---------------------------------------------------------------------------

    \135\ 12 U.S.C. 5514(a).
---------------------------------------------------------------------------

    One consulting party asserted that the final rule's treatment of 
Tribal instrumentalities or entities wholly owned by tribes was 
inconsistent with the treatment proposed by the Bureau in its 2023 
proposed rule regarding registration of nonbanks that use certain terms 
and conditions.\136\ The Bureau disagrees with the consulting party's 
characterization of its other proposal. The present final rule does not 
adopt a different or narrower approach to issues related to tribally 
affiliated entities than the Bureau proposed in its other proposed 
rule. That proposed rule, like the present final rule, did not propose 
to exempt entities that are not part of the tribe itself from its 
proposed registration requirements. As discussed further in the 
section-by-section discussion of Sec.  1092.201(d) below, the Bureau 
declines to provide an express exemption from the final rule for Tribal 
instrumentalities or entities wholly owned by tribes because the Bureau 
does not choose to use this rulemaking as the vehicle for determining 
the circumstances under which tribally affiliated entities qualify as 
part of the tribe itself. As discussed in the section-by-section 
discussion of Sec. Sec.  1092.202(g) and 1092.204(f) below, the Bureau 
believes that the voluntary good-faith filing option established in 
those sections of the final rule provides a satisfactory mechanism for 
tribally affiliated entities to avoid the risk of an enforcement action 
where they decide not to register an order or submit a written 
statement based on a good-faith belief that they are not a covered 
nonbank or a supervised registered entity, such as on the grounds that 
they qualify as part of a federally recognized tribe and thus as a 
``State.''
---------------------------------------------------------------------------

    \136\ See Registry of Supervised Nonbanks That Use Form 
Contracts To Impose Terms and Conditions That Seek To Waive or Limit 
Consumer Legal Protections, 88 FR 6906, 6937-38 (Feb. 1, 2023).
---------------------------------------------------------------------------

    Consulting parties also expressed concerns, including 
confidentiality and privacy concerns, regarding the notifications of 
non-registration provided for in Sec. Sec.  1092.202(g) and 1092.204(f) 
of the final rule. As discussed in the section-by-section discussion of 
those sections below, the option to file notifications of non-
registration under these provisions is voluntary and does not impose 
any mandatory process or other obligation on tribes or any other 
persons. Nor would a decision not to file a voluntary good-faith 
notification change or enlarge the coverage of the rule. Certain 
consulting parties stated that the Bureau should adopt a more informal 
mechanism for submitting such notifications, such as via electronic 
mail or regular mail to a designated Bureau representative. The Bureau 
does not believe that eliminating the voluntary option to file 
notifications of non-registration via the nonbank registry under 
Sec. Sec.  1092.202(g) and 1092.204(f), or soliciting separate 
communications from persons that may wish to notify the Bureau of the 
type of information that would be submitted to the Bureau under those 
sections of the final rule, would improve the confidentiality or 
privacy of those communications. Nor would such an informal approach 
enhance the efficiency or effectiveness of the nonbank registry. 
Instead, such an approach would add complexity to the process of 
notifying the Bureau about issues relevant to the registry and thus 
deter the submission of relevant information to the Bureau. The Bureau 
concludes that a system-based approach to such matters will be more 
efficient and effective in accomplishing the purposes of the final 
rule. Nor is it clear that it would be less burdensome for either a 
tribe or the Bureau to engage in such informal and ad hoc 
communications than it would be for the tribe to submit a succinct 
electronic notification of non-registration under Sec. Sec.  
1092.202(g) and 1092.204(f) via the nonbank registry.
    A consulting party stated that the Bureau should specify whether or 
not, in what level of detail, and how the Bureau intends to make 
registry information publicly available. For discussions addressing 
these matters, see part IV(F) and the section-by-section discussion of 
Sec.  1092.205(a) regarding the information the Bureau intends to 
publish under Sec.  1092.205(a) of the final rule.
    See the section-by-section discussion of Sec. Sec.  1092.201(d), 
1092.202(g), and 1092.204(f) below for additional discussion of issues 
related to tribes and the notifications of non-registration provided 
for in the final rule.

VI. Section-by-Section Analysis

Part 1092

Subpart A--General

Section 1092.100 Authority and Purpose

Proposed Rule
    Proposed Sec.  1092.100(a) would have set forth the legal authority 
for proposed 12 CFR part 1092, including all subparts. Proposed Sec.  
1092.100 would have referred to CFPA sections 1022(b)

[[Page 56046]]

and (c) and 1024(b),\137\ which were discussed in section III of the 
proposal.
---------------------------------------------------------------------------

    \137\ 12 U.S.C. 5512(b), (c); 12 U.S.C. 5514(b).
---------------------------------------------------------------------------

    Proposed Sec.  1092.100(b) would have explained that the purpose of 
part 1092 is to prescribe rules regarding nonbank registration 
requirements, to prescribe rules concerning the collection of 
information from registered entities, and to provide for public release 
of that information as appropriate.
Comments Received and Final Rule
    The Bureau solicited comment on proposed Sec.  1092.100 and did not 
receive any comments specifically regarding proposed Sec.  1092.100. 
See part III above for a general discussion of several CFPA provisions 
on which the Bureau relies in this rulemaking. The Bureau is finalizing 
Sec.  1092.100 as proposed, with minor technical changes.

Section 1092.101 General Definitions

Section 1092.101(a)
    Proposed Sec.  1092.101(a) would have defined the terms 
``affiliate,'' ``consumer,'' ``consumer financial product or service,'' 
``covered person,'' ``Federal consumer financial law,'' ``insured 
credit union,'' ``person,'' ``related person,'' ``service provider,'' 
and ``State'' as having the meanings set forth in the CFPA, 12 U.S.C. 
5481. The Bureau solicited comment on this proposed provision and 
received no comments. The Bureau is finalizing Sec.  1092.101(a) as 
proposed.
Section 1092.101(b)
    Proposed Sec.  1092.101(b) would have defined the term ``Bureau'' 
as a reference to the Consumer Financial Protection Bureau. The Bureau 
solicited comment on this proposed definition and received no comments 
on this proposed definition. The Bureau is finalizing Sec.  1092.101(b) 
as proposed.
Section 1092.101(c)
    Proposed Sec.  1092.101(c) would have clarified that the terms 
``include,'' ``includes,'' and ``including'' throughout part 1092 would 
denote non-exhaustive examples covered by the relevant provision.\138\ 
The Bureau solicited comment on proposed Sec.  1092.101(c). No 
commenters addressed proposed Sec.  1092.101(c). The Bureau is 
finalizing Sec.  1092.101(c) as proposed. As used in the final rule, 
these terms should not be construed more restrictively than the 
ordinary usage of such terms so as to exclude any other thing not 
referred to or described.\139\
---------------------------------------------------------------------------

    \138\ See, e.g., Christopher v. SmithKline Beecham Corp., 567 
U.S. 142, 162 (2012) (use of ``includes'' indicates that ``the 
examples enumerated in the text are intended to be illustrative, not 
exhaustive'').
    \139\ See 12 U.S.C. 5301(18)(A) (similarly defining the term 
``including'' for purposes of the Dodd-Frank Act by reference to 12 
U.S.C. 1813).
---------------------------------------------------------------------------

Section 1092.101(d)
    Proposed Sec.  1092.101(d) would have defined the term ``nonbank 
registration system'' to mean the Bureau's electronic registration 
system identified and maintained by the Bureau for the purposes of part 
1092. The Bureau solicited comment on this proposed definition and 
received no comments on the proposed definition.
    The Bureau is finalizing Sec.  1092.101(d) as proposed, with minor 
revisions to change this term to ``nonbank registry,'' which as adopted 
in the final rule means ``the Bureau's electronic registry identified 
and maintained by the Bureau for the purposes of part 1092.'' The 
Bureau is adopting the revised definition for stylistic reasons, with 
no change in meaning from the term ``nonbank registration system'' that 
was used in the proposed rule. The Bureau is also adopting 
corresponding changes to the proposed rule to use the term ``nonbank 
registry'' instead of the term ``nonbank registration system'' 
throughout the final rule, including at Sec. Sec.  1092.102(a) through 
(c); 1092.201(a); 1092.202(b), (c), (f), (g); 1092.204(d), (f); and 
1092.205(a), (c) of the final rule.
Section 1092.101(e)
    Proposed Sec.  1092.101(e) would have defined the term ``nonbank 
registration system implementation date'' to mean, for a given 
requirement or subpart of part 1092, the date(s) determined by the 
Bureau to commence the operations of the nonbank registration (NBR) 
system in connection with that requirement or subpart. The Bureau 
anticipated that the nonbank registration system implementation date 
with respect to proposed subpart B would occur sometime after the 
effective date of the final rule and no earlier than January 2024. The 
Bureau explained that the actual nonbank registration system 
implementation date would depend, in significant part, upon the 
Bureau's ability to develop and launch the required technical systems 
that would support the submission and review of applicable filings, and 
on feedback provided by commenters regarding the time registrants would 
need to implement proposed part 1092's requirements. The Bureau 
proposed to provide advance public notice regarding the nonbank 
registration system implementation date with respect to subpart B to 
enable entities subject to subpart B to prepare and submit timely 
filings to the NBR system. No comments addressed this proposal.
    The Bureau is finalizing Sec.  1092.101(e) largely as proposed with 
two revisions as follows.
    First, for stylistic reasons, the Bureau is adopting a revision to 
change this term to ``nonbank registry implementation date'' (without 
any change in meaning). This revision corresponds with the Bureau's 
adoption of the term ``nonbank registry'' in Sec.  1092.101(d) as 
discussed above. The Bureau is also adopting corresponding changes to 
the proposed rule to use the term ``nonbank registry implementation 
date'' instead of the term ``nonbank registration system implementation 
date'' throughout the final rule, including at Sec. Sec.  1092.202(b) 
and 1092.204(a) of the final rule.
    Second, the final rule provides that the definition of the term 
``nonbank registry implementation date'' in Sec.  1092.101(e) means, 
for a given requirement or subpart of part 1092, or a given person or 
category of persons, the date(s) determined by the Bureau to commence 
the operations of the nonbank registry in connection with that 
requirement or subpart. Thus, the final rule clarifies that the nonbank 
registry implementation date may be different for different persons or 
categories of persons.
    Also, in connection with this change, the Bureau is adopting a new 
section of the final rule at Sec.  1092.206 that specifies the nonbank 
registry implementation date in connection with the requirements of 
subpart B for three different categories of covered persons subject to 
the final rule. While the proposal would have provided for a separate 
later determination by the Bureau of the ``nonbank registration system 
implementation date,'' the Bureau concludes that specifying the nonbank 
registry implementation date in the final rule will provide registrants 
and the Bureau with more information and certainty regarding the timing 
of the launch of the registry and the requirements imposed under the 
final rule. Section 1092.206 of subpart B establishes different nonbank 
registry implementation dates for covered nonbanks that are larger 
participants in supervised markets, other supervised nonbanks, and 
other covered nonbanks for registrations under subpart B. For further 
information, see the section-by-section analysis of Sec.  1092.206 
below.

[[Page 56047]]

Section 1092.102 Submission and Use of Registration Information

Section 1092.102(a) Filing Instructions
Proposed Rule
    Proposed Sec.  1092.102(a) would have provided that the Bureau 
shall specify the form and manner for electronic filings and 
submissions to the NBR system that are required or made voluntarily 
under part 1092. The Bureau explained that it would issue specific 
guidance for filings and submissions. The Bureau anticipated that its 
filing instructions may, among other things, specify information that 
filers must submit to verify that they have authority to act on behalf 
of the entities for which they are purporting to register. The Bureau 
proposed to accept electronic filings and submissions to the NBR system 
only and did not propose to accept paper filings or submissions.
    Proposed Sec.  1092.102(a) also would have stated that the Bureau 
may provide for extensions of deadlines or time periods prescribed by 
the proposed rule for persons affected by declared disasters or other 
emergency situations. The Bureau explained in the proposal that such 
situations could include natural disasters such as hurricanes, fires, 
or pandemics, and also could include other emergency situations or 
undue hardships including technical problems involving the NBR system. 
For example, the Bureau could defer deadlines during a presidentially 
declared emergency or major disaster under the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) 
or a presidentially declared pandemic-related national emergency under 
the National Emergencies Act (50 U.S.C. 1601 et seq.). The Bureau 
stated that it would issue guidance regarding such situations.
Comments Received and Final Rule
    The Bureau did not receive comments specifically about proposed 
Sec.  1092.102(a). The Bureau is finalizing Sec.  1092.102(a) as 
proposed.\140\
---------------------------------------------------------------------------

    \140\ See the section-by-section discussion of Sec.  1092.101(d) 
above regarding the Bureau's adoption of the revised term ``nonbank 
registry.''
---------------------------------------------------------------------------

Section 1092.102(b) Coordination or Combination of Systems
Proposed Rule
    Proposed Sec.  1092.102(b) would have provided that in 
administering the NBR system, the Bureau may rely on information a 
person previously submitted to the NBR system under part 1092. This 
proposed section would have clarified, for example, that the 
registration process for proposed subpart B may take account of 
information previously submitted, such as in a prior registration under 
subpart B or, if applicable, a registration of nonbanks that use 
certain terms and conditions and related information under subpart C.
    Proposed Sec.  1092.102(b) also would have provided that in 
administering the NBR system, the Bureau may coordinate or combine 
systems in consultation with State agencies as described in CFPA 
sections 1022(c)(7)(C) and 1024(b)(7)(D). Those statutory provisions 
provide that the Bureau shall consult with State agencies regarding 
requirements or systems (including coordinated or combined systems for 
registration), where appropriate. The Bureau sought comment on the 
types of coordinated or combined systems that would be appropriate and 
the types of information that could be obtained from or provided to 
State agencies.
Comments Received
    In connection with proposed Sec.  1092.102(b), the Bureau sought 
comment on the types of coordinated or combined systems that would be 
appropriate under CFPA sections 1022(c)(7)(C) and 1024(b)(7)(D) and the 
types of information that could be obtained from or provided to State 
agencies. For a discussion of certain comments related to this topic, 
and the Bureau's response thereto, see the section-by-section 
discussion of Sec.  1092.203.
    A consumer advocate commenter agreed that the Bureau, in 
administering the NBR system, should rely on information an entity 
previously submitted to the registry under part 1092 and coordinate or 
combine systems with State agencies, as provided in proposed Sec.  
1092.102(b). The commenter stated that not only would this provision 
allow for more efficient implementation of the registry by avoiding 
duplicative or redundant efforts but would also reflect the importance 
of this registry to both Federal and State regulators, and that the 
Bureau should consider coordination with existing State consumer 
financial protection agencies.
Response to Comments Received
    As required by CFPA sections 1022(c)(7)(C) and 1024(b)(7)(D) and 
described in part V, the Bureau has consulted with State agencies on 
requirements and systems related to the nonbank registry. The Bureau 
also intends to continue to consult with State agencies in implementing 
the nonbank registry. Under Sec.  1092.203, with respect to any NMLS-
published covered order, a covered nonbank that is identified by name 
as a party subject to the order may elect to comply with the one-time 
registration option described in that section in lieu of complying with 
the requirements of Sec. Sec.  1092.202 and 1092.204. As discussed in 
the section-by-section discussion of Sec.  1092.203, the Bureau is 
adopting this option partly in recognition of the statutory mandates to 
consult with State agencies regarding combined or coordinated systems 
for registration in CFPA sections 1022(c)(7)(C) and 1024(b)(7)(D).
Final Rule
    For the reasons discussed above, the Bureau is finalizing Sec.  
1092.102(b) as proposed.\141\
---------------------------------------------------------------------------

    \141\ See the section-by-section discussion of Sec.  1092.101(d) 
above regarding the Bureau's adoption of the revised term ``nonbank 
registry.''
---------------------------------------------------------------------------

Section 1092.102(c) Bureau Use of Information
Proposed Rule
    Proposed Sec.  1092.102(c) would have provided that the Bureau may 
use the information submitted to the NBR system under this part to 
support its objectives and functions, including in determining when to 
exercise its authority under CFPA section 1024 to conduct examinations 
and when to exercise its enforcement powers under subtitle E of the 
CFPA.
    The Bureau proposed to establish the NBR system under its 
registration and market-monitoring rulemaking authorities under CFPA 
section 1022(b)(1), (c)(1)-(4) and (c)(7), and under its supervisory 
rulemaking authorities under CFPA section 1024(b)(7)(A), (B), and (C). 
The Bureau explained in its proposal that it intended to use the 
information submitted under the NBR system to monitor for risks to 
consumers in the offering or provision of consumer financial products 
or services, and to support all of its functions as appropriate, 
including its supervisory, rulemaking, enforcement, and other 
functions. The Bureau stated that it may, among other things, rely on 
the information submitted under part 1092 as it considers whether to 
initiate supervisory activity at a particular entity, in determining 
the frequency and nature of its supervisory activity with respect to 
particular entities or markets, in prioritizing and scoping its 
supervisory, examination, and enforcement activities, and otherwise in 
assessing and detecting risks to consumers. In particular, the Bureau

[[Page 56048]]

explained that it could consider this information in developing its 
risk-based supervision program and in assessing the risks posed to 
consumers in relevant product markets and geographic markets and the 
factors described in 12 U.S.C. 5514(b)(2) with respect to particular 
covered persons, and for enforcement purposes.\142\
---------------------------------------------------------------------------

    \142\ See, e.g., 12 U.S.C. 5514(b)(2)(C), (D), (E) (providing 
that in prioritizing examinations the Bureau shall consider ``the 
risks to consumers created by the provision of such consumer 
financial products or services,'' ``the extent to which such 
institutions are subject to oversight by State authorities for 
consumer protection,'' and ``any other factors that the Bureau 
determines to be relevant to a class of covered persons''); see 
also, e.g., 12 U.S.C. 5565(c)(3)(D), (E) (providing that in 
determining the amount of civil money penalties the Bureau shall 
consider ``the history of previous violations'' and ``such other 
matters as justice shall require'').
---------------------------------------------------------------------------

    Proposed Sec.  1092.102(c) also would have provided that part 1092, 
and registration under that part, would not alter any applicable 
process whereby a person may dispute that it qualifies as a person 
subject to Bureau authority. As an example of such a process, the 
Bureau cited in the proposal 12 CFR 1090.103, which establishes a 
Bureau administrative process for assessing a person's status as a 
larger participant under CFPA section 1024(a)(1)(B) and (2) and 12 CFR 
part 1090. The Bureau explained that, under proposed Sec.  1092.102(c), 
a person could dispute its status as a larger participant under 12 CFR 
1090.103 notwithstanding any registration or information submitted to 
the NBR system under part 1092. Submission of such a dispute regarding 
larger participant status to the Bureau under 12 CFR 1090.103, 
including the Bureau's processes regarding the treatment of such 
disputes and the effect of any determinations regarding the person's 
supervised status, would be governed by the provisions of 12 CFR part 
1090. The Bureau explained that it could use the information provided 
to the NBR system in connection with making any determination regarding 
a person's supervised status under 12 CFR 1090.103, along with the 
affidavit submitted by the person and other information as provided in 
that section. However, the submission of information to the NBR system 
would not have prevented a person from also submitting other 
information under 12 CFR 1090.103.
Comments Received and Final Rule
    The Bureau received no comments on proposed Sec.  1092.102(c) and 
is finalizing it as proposed.\143\
---------------------------------------------------------------------------

    \143\ See the section-by-section discussion of Sec.  1092.101(d) 
above regarding the Bureau's adoption of the revised term ``nonbank 
registry.''
---------------------------------------------------------------------------

Section 1092.102(d) Calculation of Time Periods
    The Bureau is finalizing Sec.  1092.102(d), which the Bureau did 
not propose, to clarify how dates and time periods prescribed in part 
1092 are calculated.
    In calculating dates and time periods, the day of the event that 
triggers the time period is excluded. Every day, including intermediate 
Saturdays, Sundays, and Federal holidays, is included. If any provision 
of part 1092 would establish a deadline for an action that is a 
Saturday, Sunday, or Federal holiday, the deadline is extended to the 
next day that is not a Saturday, Sunday, or Federal holiday. The 
clarifications for calculation of dates and time periods apply to all 
such calculations in subpart B.

Section 1092.103 Severability

Proposed Rule
    Proposed Sec.  1092.103 would have provided that the provisions of 
the proposed rule are separate and severable from one another, and that 
if any provision is stayed or determined to be invalid, the remaining 
provisions shall continue in effect. As the Bureau stated in the 
proposal, this is a standard severability clause of the kind that is 
included in many regulations to clearly express agency intent about the 
course that is preferred if such events were to occur. The Bureau 
explained that it carefully considered the requirements of the proposed 
rule, both individually and in their totality, including their 
potential costs and benefits to covered persons and consumers. The 
Bureau further explained that in the event a court were to stay or 
invalidate one or more provisions of the proposed rule as finalized, 
the Bureau would have wanted the remaining portions of the rule as 
finalized to remain in full force and legal effect.
Comments Received and Final Rule
    The Bureau received no comments on proposed Sec.  1092.103. It is 
finalizing proposed Sec.  1092.103 with revisions to clarify that 
applications of provisions are also severable. The Bureau has carefully 
considered the requirements of the final rule, both individually and in 
their totality, including their potential costs and benefits to covered 
persons and consumers. The Bureau intends that, if any provision of 
this rule, or any application of a provision, is stayed or determined 
to be invalid, the remaining provisions or applications are severable 
and shall continue in effect.

Subpart B--Registry of Nonbank Covered Persons Subject to Certain 
Agency and Court Orders

Section 1092.200 Scope and Purpose

Proposed Rule
    Proposed Sec.  1092.200(a) and (b) would have described the scope 
and purpose of proposed subpart B. Proposed subpart B would have 
required nonbank covered persons that are subject to certain public 
agency and court orders enforcing the law to register with the Bureau 
and to submit copies of the orders to the Bureau. It also would have 
described the registration information the Bureau would make publicly 
available. Proposed Sec.  1092.200(a) also explained that subpart B 
would have required certain nonbank covered persons that are supervised 
by the Bureau to prepare and submit an annual written statement. The 
requirements regarding annual written statements were described in 
proposed Sec.  1092.203.
    Proposed Sec.  1092.200(b) would have explained that the purposes 
of the information collection requirements in proposed subpart B were 
to support Bureau functions by monitoring for risks to consumers in the 
offering or provision of consumer financial products or services, 
including developments in markets for such products or services, 
pursuant to CFPA section 1022(c)(1); to prescribe rules regarding 
registration requirements applicable to nonbank covered persons, 
pursuant to CFPA section 1022(c)(7); and to facilitate the supervision 
of persons described in CFPA section 1024(a)(1), to ensure that such 
persons are legitimate entities and are able to perform their 
obligations to consumers, and to assess and detect risks to consumers, 
pursuant to CFPA section 1024(b).
Comments Received and Final Rule
    Comments addressing CFPA section 1024(b)(3) and (4) \144\ are 
addressed in the section-by-section discussion of Sec.  
1092.202(b).\145\ The Bureau received no other comments specifically 
addressing proposed Sec.  1092.200.
---------------------------------------------------------------------------

    \144\ 12 U.S.C. 5514(b)(3), (4).
    \145\ See also the section-by-section discussion of Sec. Sec.  
1092.201(e) and 1092.203(a) below.
---------------------------------------------------------------------------

    The Bureau is finalizing Sec.  1092.200(a) and (b) as proposed, 
with a revision to reflect the Bureau's adoption of a revised Sec.  
1092.205(a) that provides that the Bureau ``may'' publish the 
information submitted to the nonbank registry pursuant to Sec. Sec.  
1092.202 and 1092.203.

[[Page 56049]]

Section 1092.201 Definitions

    In its proposal, the Bureau sought comment on various definitions 
set forth in proposed subpart B and any suggested clarifications, 
modifications, or alternatives.
    The Bureau is finalizing a number of definitions for terms used in 
subpart B in Sec.  1092.201. These definitions are each discussed in 
detail below. These definitions supplement the general definitions for 
the entirety of part 1092 provided in Sec.  1092.101.
Section 1092.201(a) Administrative Information
Proposed Rule
    Proposed Sec.  1092.201(a) would have defined the term 
``administrative information'' to mean contact information regarding 
persons subject to subpart B and other information submitted or 
collected to facilitate the administration of the NBR system. The 
Bureau explained that administrative information would have included 
information such as date and time stamps of submissions to the NBR 
system, contact information for nonbank personnel involved in making 
submissions, filer questions and other communications regarding 
submissions and submission procedures, reconciliation or correction of 
errors, information submitted under proposed Sec. Sec.  1092.202(g) and 
1092.203(f),\146\ and other information that would be submitted or 
collected to facilitate the administration of the NBR system. Proposed 
Sec.  1092.204(a) would have provided that the Bureau may determine not 
to publish such administrative information. The Bureau sought comment 
on whether any other information that might be collected through the 
NBR system should also be treated as administrative information.
---------------------------------------------------------------------------

    \146\ See discussion in the section-by-section discussion of 
these provisions below.
---------------------------------------------------------------------------

Comments Received
    A trade association commenter stated that the proposal's definition 
of ``administrative information'' was unclear and thus could include a 
limitless breadth of information. As a result, the commenter argued, 
the proposal's estimate of the rule's burden was inaccurate. In 
particular, the commenter stated that entities would need to hire 
outside legal counsel in order to determine what constitutes 
``administrative information.''
    Several Tribal commenters commented that good-faith notifications 
to the Bureau under proposed Sec. Sec.  1092.202(g) and 1092.204(f) 
should not be published, as publishing such notifications would invite 
debate and disagreement on the issues addressed in those notifications, 
require the utilization of limited Tribal resources to support the 
tribe's position, and invite frivolous litigation.
    Comments addressing the publication of information more generally 
are addressed in the section-by-section discussion of Sec.  1092.205 
below.
Response to Comments Received
    The Tribal commenters expressed concern regarding publication of 
information with respect to good faith notifications submitted under 
proposed Sec. Sec.  1092.202(g) and 1092.204(f). Under the final rule, 
the Bureau will not publish under Sec.  1092.205(a) the administrative 
information collected under subpart B; for a discussion of this issue 
see the section-by-section discussion of Sec.  1092.205 below. In 
addition, in the final rule, the Bureau has codified in the text of 
Sec.  1092.201(a) its proposal to treat good faith notifications 
submitted under Sec. Sec.  1092.202(g) and 1092.204(f) as 
``administrative information.'' Thus, under the final rule, the Bureau 
will not publish the good faith notification information described in 
Sec.  1092.201(a) under Sec.  1092.205.
    As discussed in the section-by-section discussion of Sec.  
1092.202(d) below, the Bureau is finalizing Sec.  1092.202(d)(2) 
without proposed Sec.  1092.202(d)(2)(v), under which the Bureau would 
have collected and published the names of a registered entity's 
affiliates registered under subpart B with respect to the same covered 
order. Under the final rule, however, the Bureau may still collect such 
information under Sec.  1092.202(c), which provides for the collection 
of ``administrative information.'' Should the Bureau determine to 
collect such information regarding affiliates, the Bureau's filing 
instructions under Sec.  1092.102(a) will categorize this information 
as ``administrative information,'' meaning that the Bureau will not 
publish the information under Sec.  1092.205. For more information, see 
the section-by-section discussions of Sec. Sec.  1092.202(d) and 
1092.205(a) below.
    The trade association commenter expresses concern that it will not 
be clear to covered nonbanks what ``administrative information'' they 
are required to submit under the rule. That comment, however, ignores 
that Sec.  1092.202(c) only requires registered entities to submit the 
specific ``administrative information'' that is ``required by'' the 
nonbank registry, and the Bureau has made clear that it will ``specify 
the types of . . . administrative information registered entities would 
be required to submit'' in ``filing instructions . . . issue[d] under . 
. . Sec.  1092.102(a).'' \147\ Therefore, covered nonbanks should have 
no need to hire outside legal counsel to ascertain what information 
qualifies as ``administrative information'' required to be submitted 
under the rule. Instead, the Bureau's filing instructions will specify 
what categories of information covered nonbanks must submit as 
``administrative information.''
---------------------------------------------------------------------------

    \147\ 88 FR 6088 at 6118.
---------------------------------------------------------------------------

    Further reducing potential uncertainty, the Bureau has identified 
certain categories of information that it currently intends to 
categorize as ``administrative information'' in its filing 
instructions--e.g., ``contact information for nonbank personnel 
involved in making submissions.'' \148\ And, as discussed above, the 
Bureau is also finalizing the definition to expressly treat as 
``administrative information'' good faith notification information 
submitted under Sec. Sec.  1092.202(g) and 1092.204(f). Under Sec.  
1092.201(a), any new categories of administrative information that the 
Bureau might address in its filing instructions, and which were not 
already discussed in the Bureau's notice of proposed rulemaking and 
this preamble, would include only contact information regarding persons 
subject to subpart B or other information submitted or collected to 
facilitate the administration of the nonbank registry. For example, the 
Bureau may require entities to comply with a login or identity-
authentication process, and the Bureau may categorize information 
submitted in connection with such a process as ``administrative 
information.'' \149\ Submitting required administrative information 
should not impose significant substantive burdens on covered nonbanks.
---------------------------------------------------------------------------

    \148\ 88 FR 6088 at 6104.
    \149\ The Bureau has retained the discretion to adjust the 
contents of required administrative information through filing 
instructions in order to maintain the viability of the nonbank 
registry over time. For example, if some new form of electronic 
communication were to replace email as the preferred method for 
business communications, the Bureau's filing instructions might 
designate as required administrative information contact information 
associated with that new medium.
---------------------------------------------------------------------------

Final Rule
    For the reasons discussed above and as follows, the Bureau is 
finalizing Sec.  1092.201(a) as proposed, with a revision to expressly 
include ``[i]nformation submitted under Sec. Sec.  1092.202(g) and 
1092.203(f)'' within the definition of ``administrative

[[Page 56050]]

information.'' \150\ The Bureau's filing instructions under Sec.  
1092.102(a) will also categorize this information as ``administrative 
information.'' The Bureau has already identified this information as 
information that it intended to categorize as ``administrative 
information'' in its filing instructions,\151\ but is finalizing this 
provision in the text of the regulation to provide further clarity that 
the Bureau will treat this information as ``administrative 
information.'' In addition to the notifications themselves, the Bureau 
may also choose to collect information to facilitate the administration 
of the notification process.
---------------------------------------------------------------------------

    \150\ See also the section-by-section discussion of Sec.  
1092.101(d) above regarding the Bureau's adoption of the revised 
term ``nonbank registry.''
    \151\ 88 FR 6088 at 6104.
---------------------------------------------------------------------------

    In addition, the Bureau does not intend to publish under Sec.  
1092.205(a) any Federal employer identification numbers (EIN) that may 
be obtained from covered nonbanks. The Bureau will not collect this 
information from covered nonbanks as ``identifying information,'' as 
that term is defined at Sec.  1092.201(g), but may determine to collect 
this information as ``administrative information'' under Sec.  
1092.202(c). In filing instructions issued under Sec.  1092.102(a), the 
Bureau will specify whether and how it will collect such information. 
The Bureau understands that EINs are not commonly used to identify 
covered nonbanks in covered orders and in related public databases that 
are maintained by relevant Federal, State, and local agencies. Thus, as 
with other administrative information, the publication of EINs may not 
in all instances be especially useful to external users of the 
registry, although the Bureau may find such information useful in its 
administration of the nonbank registry.
Section 1092.201(b) Attesting Executive
Proposed Rule
    Proposed Sec.  1092.201(b) would have defined the term ``attesting 
executive'' to mean, with respect to any covered order regarding a 
supervised registered entity, the individual designated by the 
supervised registered entity to perform the supervised registered 
entity's duties with respect to the covered order under proposed Sec.  
1092.203. In the section-by-section discussion of proposed Sec.  
1092.203, the Bureau proposed requirements regarding attesting 
executives.
Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(b)'s definition of ``attesting executive.'' 
Comments addressing the proposal's approach to the written statement, 
including requirements regarding designation of attesting executives 
and associated criteria for such a designation, are addressed in the 
section-by-section discussion of Sec.  1092.204 below.
    The Bureau is finalizing Sec.  1092.201(b) as proposed, with a 
revision to reflect the renumbering of Sec.  1092.204 in the final 
rule.
Section 1092.201(c) Covered Law
Proposed Rule
    Proposed Sec.  1092.201(c) would have defined the term ``covered 
law'' to mean one of several types of laws, as described. The proposed 
term ``covered law'' would have been central to defining which orders 
and portions of orders would be subject to the requirements of proposed 
subpart B. Proposed Sec.  1092.201(e) would have defined the term 
covered order to include certain orders that impose certain obligations 
on a covered nonbank based on an alleged violation of a covered law. 
Thus, the proposed term ``covered law'' would have helped determine the 
application of proposed subpart B's registration requirements.
    Under the proposal, a law listed in proposed Sec.  1092.201(c)(1) 
through (6) would have qualified as a covered law only to the extent 
that the violation of law found or alleged arose out of conduct in 
connection with the offering or provision of a consumer financial 
product or service. The Bureau was interested in registering orders 
that relate to offering or providing consumer financial products or 
services. The Bureau recognized that the laws listed in proposed Sec.  
1092.201(d)(1) through (6) may apply to a wide range of conduct not 
involving consumer financial products or services. While the Bureau 
believed that reporting on such violations could still be probative of 
risks to consumers in the markets for consumer financial products and 
services--as misconduct in one line of business is not necessarily 
cabined to that line of business--the Bureau believed that a more 
limited definition of covered law would strike the right balance 
between ensuring that the Bureau remains adequately informed of risks 
to consumers in the offering or provision of consumer financial 
products and services and minimizing the potential burden of the 
reporting requirements on nonbank covered persons.
    The proposal listed categories of laws that would have constituted 
``covered laws'' to the extent that the violation of law found or 
alleged arose out of conduct in connection with the offering or 
provision of a consumer financial product or service. For the reasons 
discussed in section V(C) of the proposal, the Bureau believed that 
orders issued under the types of covered laws described in the proposal 
are likely to be probative of risks to consumers in the offering or 
provision of consumer financial products or services, including 
developments in markets for such products or services.
    First, proposed Sec.  1092.201(c)(1) would have defined the term 
``covered law'' to include a Federal consumer financial law, as that 
term was defined in proposed Sec.  1092.101(a) and the CFPA.\152\ The 
Bureau explained that it is charged with administering, interpreting, 
and enforcing the Federal consumer financial laws, which include the 
CFPA itself, 18 enumerated consumer laws (such as the Fair Credit 
Reporting Act and the Truth in Lending Act),\153\ and the laws for 
which authorities were transferred to the Bureau under subtitles F and 
H of the CFPA, as well as rules and orders issued by the Bureau under 
any of these laws.\154\
---------------------------------------------------------------------------

    \152\ See 12 U.S.C. 5481(14).
    \153\ See 12 U.S.C. 5481(12).
    \154\ 12 U.S.C. 5481(14).
---------------------------------------------------------------------------

    The Bureau believed that requiring registration of covered nonbanks 
in connection with certain orders issued under Federal consumer 
financial laws would further the purposes of proposed subpart B. As the 
Bureau discussed in section IV of the proposal, ``to support [the 
Bureau's] rulemaking and other functions,'' Congress mandated that the 
Bureau ``shall monitor for risks to consumers in the offering or 
provision of consumer financial products or services, including 
developments in markets for such products or services.'' \155\ The 
Bureau noted that, in matters where an agency other than the Bureau has 
issued or obtained a final public order concluding that an entity has 
violated Federal consumer financial law in connection with the offering 
or provision of a consumer financial product or service, the Bureau 
will generally have jurisdiction over the conduct that resulted in that 
order. The Bureau explained that it therefore has a clear interest in 
identifying and understanding the nature of the risks to consumers 
presented by such conduct,

[[Page 56051]]

including the risk that the conduct continues outside the particular 
jurisdiction or in connection with other consumer financial products or 
services that are offered or provided by the covered nonbank. A pattern 
of similar alleged or found violations of Federal consumer financial 
law across multiple nonbank covered persons may indicate a problem that 
the Bureau can best address by engaging in rulemaking to clarify or 
expand available consumer protection to address emerging consumer risk 
trends, or by using other tools, such as consumer education, to address 
the identified risks. And, depending on the facts and circumstances, 
the Bureau may consider bringing its own supervisory or enforcement 
action in connection with the same or related conduct.\156\ Thus, the 
Bureau believed that violations of the Federal consumer financial laws, 
and especially repeat violations of such laws, may be probative of 
risks to consumers and may indicate more systemic problems at an entity 
or in the relevant market related to the offering or provision of 
consumer financial products or services.
---------------------------------------------------------------------------

    \155\ 12 U.S.C. 5512(c)(1).
    \156\ The Bureau also proposed to require registration of orders 
that the Bureau has obtained or issued for violations of Federal 
consumer financial laws. In the proposal, the Bureau explained that, 
while it is of course aware of such orders, collecting all orders 
for violations of covered laws--including those obtained or issued 
by the Bureau--within the proposed registry would benefit the 
Bureau, other regulators, and the general public by providing a 
single point of reference for such orders. The Bureau explained that 
it would also benefit from receiving the written statements required 
under proposed Sec.  1092.203 with respect to orders it obtains or 
issues.
---------------------------------------------------------------------------

    Second, proposed Sec.  1092.201(c)(2) would have defined the term 
``covered law'' to include any other law as to which the Bureau may 
exercise enforcement authority. As explained in section IV(C) of the 
proposal, the Bureau may enforce certain laws other than Federal 
consumer financial laws, such as the Military Lending Act.\157\
---------------------------------------------------------------------------

    \157\ 10 U.S.C. 987(f)(6) (authorizing Bureau enforcement of the 
Military Lending Act).
---------------------------------------------------------------------------

    The Bureau believed that the proposed registry should collect 
information regarding agency and court orders issued under any law that 
the Bureau may enforce, where the violation of law found or alleged 
arises out of conduct in connection with the offering or provision of a 
consumer financial product or service. By definition, the conduct 
addressed in such orders would generally fall within the scope of the 
Bureau's enforcement authority. More generally, the Bureau noted that 
in its experience, evidence of such conduct could be highly probative 
of a broader risk that the entity has engaged or will engage in conduct 
that may violate Federal consumer financial laws. For example, 
violations of the Military Lending Act may overlap with, or be closely 
associated with, violations of the CFPA's UDAAP prohibitions \158\ or 
the Truth in Lending Act,\159\ among other Federal consumer financial 
laws. In addition, the Bureau noted that a violation of one law within 
the Bureau's enforcement authority may be indicative of broader 
inadequacies in an entity's compliance systems that are resulting in or 
could result in other legal violations, including violations of Federal 
consumer financial laws. Furthermore, the Bureau believed that 
including in the registry orders issued under any law that the Bureau 
may enforce (where the violation of law found or alleged arises out of 
conduct in connection with the offering or provision of a consumer 
financial product or service) would further the Bureau's objective of 
creating a registry that could serve as a single, consolidated 
reference tool for use in monitoring for risks to consumers, thereby 
increasing the Bureau's ability to use the registry to monitor for 
patterns of risky conduct of nonbank covered persons across entities, 
industries, and product offerings.
---------------------------------------------------------------------------

    \158\ 15 U.S.C. 5531, 5536(a)(1)(B).
    \159\ 15 U.S.C. 1601 et seq.
---------------------------------------------------------------------------

    Third, proposed Sec.  1092.201(c)(3) would have defined the term 
``covered law'' to include the prohibition of unfair or deceptive acts 
or practices under section 5 of the FTC Act, 15 U.S.C. 45, or any rule 
or order issued for the purpose of implementing that prohibition. The 
proposal would not have included within the definition of ``covered 
law'' FTC Act section 5's prohibition of ``[u]nfair methods of 
competition in or affecting commerce,'' or rules or orders issued 
solely pursuant to that prohibition.\160\ The Bureau explained that it 
expected that entities would be aware in any specific case whether a 
provision of an applicable order has been issued under FTC Act section 
5's prohibition of unfair or deceptive acts or practices (or a rule or 
order issued for the purpose of implementing that prohibition), as 
opposed to section 5's prohibition of ``[u]nfair methods of competition 
in or affecting commerce'' (or a rule or order issued thereunder), and 
thus whether the order provision was issued under a ``covered law'' or 
not. The Bureau understood that orders issued in connection with 
violations of FTC Act section 5 routinely distinguish between these two 
authorities, and that orders issued under FTC Act section 5's 
prohibition of ``[u]nfair methods of competition in or affecting 
commerce'' rarely, if ever, relate to UDAP violations involving the 
offering or provision of a consumer financial product or service.
---------------------------------------------------------------------------

    \160\ 15 U.S.C. 45(a)(1).
---------------------------------------------------------------------------

    As discussed further in section IV(C) of the proposal, the Bureau 
believed that an order issued under FTC Act section 5's prohibition of 
unfair or deceptive acts or practices may be probative of violations of 
Federal consumer financial law, including CFPA sections 1031 and 
1036(a)(1)(B).\161\ Because the CFPA's prohibition of unfair or 
deceptive acts or practices is modeled after FTC Act section 5's 
similar prohibition,\162\ conduct in connection with the offering or 
provision of a consumer financial product or service that constitutes a 
UDAP violation under FTC Act section 5 also likely violates the CFPA's 
UDAAP provisions. The Bureau also believed that FTC Act section 5 
unfairness and deception violations related to the offering or 
provision of consumer financial products or services may indicate more 
systemic problems at an entity that may impact the offering or 
provision of consumer financial products or services other than those 
issues specifically identified in the order. The Bureau noted that it 
would need to know about such findings so that it can assess whether 
the violation is indicative of a larger and potentially more systemic 
problem at the covered nonbank, or potentially throughout an entire 
market. And, the Bureau explained, information about such violations 
would inform the Bureau's exercise of its various rulemaking, 
supervisory, enforcement, consumer education, and other functions.
---------------------------------------------------------------------------

    \161\ 12 U.S.C. 5531, 5536(a)(1)(B).
    \162\ See, e.g., Consumer Fin. Prot. Bureau v. ITT Educ. Servs., 
219 F. Supp. 3d at 902-04.
---------------------------------------------------------------------------

    ``Covered law'' under the proposal would have included not only FTC 
Act section 5, but also any rules or orders issued for the purpose of 
implementing FTC Act section 5's UDAP prohibition.\163\ Section 18 of 
the FTC Act, 15 U.S.C. 57a, authorizes the FTC to prescribe ``rules 
which define with specificity acts or practices which are unfair or 
deceptive acts or practices in or affecting commerce'' within the 
meaning of FTC Act section 5(a)(1).\164\ These FTC rules, which are 
known as ``trade regulation rules,'' would have been covered laws under 
the proposed

[[Page 56052]]

definition to the extent the conduct found or alleged to violate such 
rules relates to the offering or provision of a consumer financial 
product or service. Violations of these rules generally constitute 
violations of FTC Act section 5 itself.\165\ And the Bureau believed 
that, like violations of FTC Act section 5 itself, violations of the 
rules issued under FTC Act section 5, where they arise out of conduct 
in connection with the offering or provision of consumer financial 
products or services, would likely be probative of risks to consumers 
and warrant attention by the Bureau.
---------------------------------------------------------------------------

    \163\ In certain circumstances, the Bureau may enforce a rule 
prescribed under the FTC Act by the FTC with respect to an unfair or 
deceptive act or practice. See 12 U.S.C. 5581(b)(5)(B)(ii). Such an 
FTC rule, where issued by the FTC to implement FTC Act section 5, 
would be a covered law under the proposed definition.
    \164\ 15 U.S.C. 57a(a)(1)(B).
    \165\ 15 U.S.C. 57a(d)(3) (``When any rule under subsection 
(a)(1)(B) takes effect a subsequent violation thereof shall 
constitute an unfair or deceptive act or practice in violation of 
section 45(a)(1) of this title, unless the Commission otherwise 
expressly provides in such rule.'').
---------------------------------------------------------------------------

    The proposed definition of ``covered law'' would also have included 
orders issued by the FTC itself under FTC Act section 5's UDAP 
prohibition, as well as by other agencies. The Bureau believed that 
violations of such orders present similar risks to consumers as those 
presented by violations of FTC Act section 5 and the rules issued 
thereunder.
    Fourth, proposed Sec.  1092.201(c)(4) would have defined the term 
``covered law'' to include a State law prohibiting unfair, deceptive, 
or abusive acts or practices that is identified in appendix A to part 
1092. Proposed appendix A provided a list of State statutes that 
prohibit unfair, deceptive, or abusive acts or practices and that the 
Bureau had reviewed and proposed to define as a covered law under this 
provision. As with the other laws described in proposed Sec.  
1092.201(c), a State UDAAP law would only have qualified as a covered 
law to the extent the conduct found or alleged to violate the State 
UDAAP law relates to the offering or provision of a consumer financial 
product or service. The Bureau reviewed the State statutes identified 
in proposed appendix A, and as explained below, it believed that 
requiring registration of covered nonbanks that are subject to covered 
orders issued under such statutes would likely further the purposes of 
proposed subpart B.
    Proposed appendix A included State laws of general applicability 
that prohibit unfair, deceptive, or abusive acts or practices and that 
might apply to the offering or provision of consumer financial products 
or services. Although the scope and content of these State laws may 
vary at the margin, the Bureau explained that it believed these 
statutes cover a core concept of unfairness, deception, or abusiveness 
that makes violations of them likely probative of risks to consumers in 
the offering or provision of consumer financial products and services. 
These statutes may commonly be referred to as ``UDAP'' or ``UDAAP'' 
statutes, or ``little FTC Acts,'' and are often labeled in State 
statutes as State ``consumer protection acts'' or as laws addressing 
``unfair'' or ``deceptive'' ``trade practices.'' State or local 
agencies may use these statutes to bring cases or actions with respect 
to practices that injure consumers. While these State statutes may also 
authorize private suits by consumers and other persons, the proposal 
would have only required registration with respect to covered orders 
issued at least in part in any action or proceeding brought by any 
Federal agency, State agency, or local agency (as described further 
below in the section-by-section discussion of Sec.  
1092.201(e)(1)(ii)).
    The Bureau proposed to list these statutes in appendix A, and thus 
to include them in the proposed rule's definition of covered law, in 
part because these statutes are generally analogous to CFPA sections 
1031 and 1036(a)(1)(B) and FTC Act section 5.\166\ Several of these 
State statutes specifically provide that ``it is the intent of the 
legislature that in construing [the State statute], the courts will be 
guided by the interpretations given by the Federal Trade Commission and 
the Federal courts to section 5(a)(1) of the Federal Trade Commission 
Act,'' or words to this effect.\167\ The Bureau noted that obtaining a 
better understanding of entities' compliance with State UDAP/UDAAP laws 
would assist the Bureau in the assessment and detection of risks for 
the same general reasons described with respect to alleged or found 
violations of FTC Act section 5. The Bureau believed that entities that 
have violated one of these State statutes, and especially repeat 
violators of such statutes, may pose heightened risks to consumers in 
the offering or provision of consumer financial products and services, 
including the risk that they have engaged, and may continue to engage, 
in unfair, deceptive, or abusive acts and practices in violation of 
CFPA section 1031. The Bureau also explained that information 
identifying patterns of such risky conduct across entities, industries, 
product offerings, or jurisdictions would be highly informative to the 
Bureau's monitoring work. The Bureau attempted to identify all of the 
applicable State UDAP/UDAAP statutes of general applicability in 
appendix A of the proposal but requested comment on whether it had 
comprehensively done so. The Bureau proposed to include in appendix A 
all such State statutes and sought comment on any additions, 
subtractions, or modifications to the State UDAP/UDAAP statutes of 
general applicability in appendix A.
---------------------------------------------------------------------------

    \166\ 12 U.S.C. 5531, 5536(a)(1)(B); 15 U.S.C. 45.
    \167\ E.g., Mass. Gen. Laws ch. 93A, sec. 2(b); Conn. Gen. Stat. 
sec. 42-110b(b).
---------------------------------------------------------------------------

    The Bureau also proposed to include in appendix A, and thus to 
include in the definition of the term covered law, certain other 
industry-specific State statutes that prevent unfair, deceptive, or 
abusive conduct in connection with certain specific consumer financial 
industries or markets. For example, proposed appendix A included New 
York Banking Law section 719(2), regarding prohibited practices by 
student loan servicers. This State statutory provision prohibits 
``[e]ngag[ing] in any unfair, deceptive or predatory act or practice 
toward any person or misrepresent[ing] or omit[ting] any material 
information in connection with the servicing of a student loan.'' \168\ 
The Bureau proposed to include this New York State law and others like 
it in appendix A, to the extent that the conduct found or alleged to 
violate such law relates to the offering or provision of a consumer 
financial product or service.
---------------------------------------------------------------------------

    \168\ New York Banking Law sec. 719(2).
---------------------------------------------------------------------------

    As with State UDAP/UDAAP laws of general applicability, the Bureau 
believed that violation of such industry-specific State statutes that 
prohibit unfair, deceptive, or abusive acts or practices in connection 
with consumer financial industries or markets and in connection with 
the offering or provision of consumer financial products or services 
would be probative of potential violations of CFPA sections 1031 and 
1036, and also of other related risks to consumers within the scope of 
the Bureau's jurisdiction. The Bureau believed that omitting these 
industry-specific statutes from the definition of ``covered law'' may 
cause the information submitted to the proposed registry to be 
incomplete. Among other things, the Bureau understood that many State 
agencies typically rely upon such industry-specific statutes to enforce 
prohibitions on conduct by covered nonbanks that is similar to that 
prohibited under UDAP/UDAAP laws of general applicability. Thus, the 
Bureau believed registration of orders issued under such State statutes 
would provide information that is probative of the types of risks the 
Bureau believed to be associated with orders issued under State UDAP/
UDAAP laws of general applicability. The Bureau attempted to

[[Page 56053]]

identify applicable State UDAP/UDAAP statutes related to applicable 
consumer financial industries or markets in proposed appendix A but 
requested comment on whether it had comprehensively done so. The Bureau 
proposed to include in appendix A all such State statutes.
    The Bureau proposed to require registration of all orders issued 
under State laws listed in appendix A, as long as the conduct at issue 
related to the offering or provision of a consumer financial product or 
service, and the order satisfied the definition of ``covered order'' in 
proposed Sec.  1092.201(e). The Bureau recognized that some State UDAP/
UDAAP statutes listed in appendix A may prohibit conduct that regulated 
entities might argue is not prohibited under CFPA sections 1031 and 
1036(a)(1)(B). For example, State UDAP/UDAAP statutes modeled after FTC 
Act section 5 may include provisions that, in addition to prohibiting 
``unfair'' and ``deceptive'' conduct, also prohibit ``unfair methods of 
competition'' in connection with antitrust or anticompetition matters. 
While the Bureau acknowledged that it is possible that such orders 
might be less probative than other orders, the Bureau believed that 
limiting the scope of such covered laws to those involving the offering 
or provision of consumer financial products and services would 
sufficiently assure that most orders reported would be valuable in 
effectively monitoring for risks to consumers in the offering or the 
provision of such products and services. Moreover, the Bureau 
anticipated that it would not always be the case that an agency or 
court order will clearly distinguish whether it is issued under State 
statutory provisions preventing ``unfair,'' ``deceptive,'' or 
``abusive'' acts and practices on the one hand, or ``anticompetitive'' 
acts or practices on the other--especially in cases where a State 
statute addresses all of them. Unlike orders issued under FTC Act 
section 5, it was not clear to the Bureau that orders issued under such 
State laws routinely distinguish between these two types of 
authorities. Therefore, the Bureau believed that attempting to carve 
out portions of State UDAP/UDAAP statutes that extend beyond the 
conduct prohibited by CFPA sections 1031 and 1036(a)(1)(B) would be 
impracticable and would risk undermining the effectiveness of the rule. 
The Bureau thus proposed to define the term ``covered law'' by listing 
specific State statutes. Where a State statute was listed in proposed 
appendix A and otherwise satisfied proposed Sec.  1092.201(c), the 
Bureau proposed to treat it as a covered law, regardless of whether any 
specific order issued under that law expressly referred to the State 
law's prohibition of ``unfair,'' ``deceptive,'' or ``abusive'' acts and 
practices. In most cases, the Bureau anticipated that violations of the 
listed State statutes that relate to the offering or provision of a 
consumer financial product or service would be probative of risks to 
consumers within the Bureau's jurisdiction.
    The Bureau did not include laws of Tribal governments in appendix A 
of the proposal. While the Bureau believed that many orders issued 
under such laws may be highly probative of risks to consumers and could 
assist the Bureau in carrying out its market-monitoring obligations--as 
well as assist the Bureau in assembling an effective nonbank registry--
the Bureau preliminarily concluded that considerations of 
administrative efficiency favored focusing on other orders.
    Fifth, proposed Sec.  1092.201(c)(5) would have included in the 
definition of the term ``covered law'' a State law amending or 
otherwise succeeding a law identified in appendix A, to the extent that 
such law is materially similar to its predecessor, and the conduct 
found or alleged to violate such law relates to the offering or 
provision of a consumer financial product or service.
    The Bureau proposed Sec.  1092.201(c)(5) in order to clarify that 
appendix A is intended to capture certain future changes made by States 
to the State laws listed therein. As the Bureau explained in the 
proposal, States may make immaterial changes from time to time, 
including renumbering or amending the statutes listed in appendix A, in 
a manner that could cause appendix A to become technically 
``incorrect'' or ``obsolete'' in the view of some regulated entities. 
Proposed Sec.  1092.201(c)(5) would have made clear that is not the 
Bureau's intent. To the extent the amended or otherwise succeeding law 
is materially similar to its predecessor, proposed Sec.  1092.201(c)(5) 
would have ensured that it would still qualify as a ``covered law.'' 
The proposed definition of covered law thus would have captured a 
successor to a law listed in appendix A if, for example, the conduct 
found or alleged to violate the successor law would have constituted a 
violation of the predecessor law were it still in effect.
    Finally, proposed Sec.  1092.201(c)(6) would have included in the 
definition of the term ``covered law'' a rule or order issued by a 
State agency for the purpose of implementing a State law described in 
proposed Sec.  1092.201(c)(4) or (5), to the extent the conduct found 
or alleged to violate such regulation relates to the offering or 
provision of a consumer financial product or service. As the Bureau 
explained, various State statutes authorize one or more State agencies 
to issue regulations implementing the terms of those statutes, thereby 
authorizing the State agency to further define specific unfair, 
deceptive, or abusive acts or practices.\169\ Proposed Sec.  
1092.201(c)(6) would have included such State agency regulations within 
the meaning of the term ``covered law.''
---------------------------------------------------------------------------

    \169\ See, e.g., Cal. Fin. Code sec. 90009(c).
---------------------------------------------------------------------------

Comments Received
    A consumer advocate commenter stated that the rule should clarify 
that, under certain specific circumstances, such as those involving 
certain misrepresentations by schools, orders would ``arise out of 
conduct related to consumer financial products and services'' as 
required under the definition of the term ``covered order.''
    An industry commenter stated that the registry should not require 
publication of orders or decisions involving the FTC's authority under 
FTC Act section 5, on the grounds that such orders are outside the 
Bureau's authority. Another industry commenter and a consumer advocate 
commenter supported including orders related to violations of the 
prohibition of unfair or deceptive acts or practices under FTC Act 
section 5, on the grounds of similarity to the CFPA's UDAAP 
prohibitions. The consumer advocate commenter also supported the 
inclusion of State UDAP laws and the Military Lending Act, stating that 
violations of the Military Lending Act may overlap with, or be closely 
associated with, violations of the CFPA's UDAAP prohibitions \170\ or 
the Truth in Lending Act.
---------------------------------------------------------------------------

    \170\ 15 U.S.C. 5531, 5536(a)(1)(B).
---------------------------------------------------------------------------

    Several commenters stated that the definition of ``covered law'' 
should not include State laws. Commenters described the inclusion of 
such laws, which were included in the definition of ``covered law'' at 
proposed Sec.  1092.202(c)(4) through (6), as an improper attempt by 
the Bureau to enforce laws that it lacks the authority to enforce or 
otherwise administer. In the opinion of the commenters, requiring 
covered nonbanks to register and submit information regarding orders 
issued under State laws would usurp the role of the appropriate State 
or local agency in issuing, enforcing, publishing, and interpreting its 
own State laws or its own orders. Commenters stated that the

[[Page 56054]]

registry would lead to the Bureau adjudicating whether a covered entity 
was in compliance with an order issued by another independent agency 
and would violate principles of federalism. Commenters--including an 
industry commenter, a joint letter from State regulators, and Members 
of Congress--stated that imposing the written-statement requirements 
described in proposed Sec.  1092.203 would be particularly 
inappropriate with respect to orders issued under State laws for these 
reasons.
    Commenters stated that the Bureau's assertions that violations of 
State law would be probative of risk to consumers were not supported or 
were highly speculative. An industry commenter stated that the Bureau 
should consider whether certain State laws are subject to Federal 
preemption in determining whether those laws should qualify as 
``covered laws.''
    Industry commenters stated that including State or local laws as 
``covered laws'' would improperly distort or shift the focus of 
compliance programs, which could result in other aspects of compliance 
programs becoming deprioritized, create unnecessary risks for 
consumers, or raise costs that would ultimately be passed on to 
consumers.
    Multiple consumer advocate commenters supported including both 
State and Federal laws because violations of both types of laws are 
probative of heightened risks to consumers and markets. A consumer 
advocate commenter stated that violations of the State laws listed in 
the proposal are almost certainly probative of potential violations of 
CFPA sections 1031 and 1036, and that the registry would be incomplete 
without their inclusion.
    A joint letter from State regulators commented that the Bureau 
should clarify whether violations of certain administrative laws might 
be interpreted by the Bureau to be violations of ``covered laws.'' The 
commenters voiced skepticism that this question could be adequately 
addressed in a final rule to the extent necessary for covered nonbanks 
to understand their obligations.
    The notice of proposed rulemaking sought specific comment on 
whether to require registration, and to list in appendix A, additional 
State statutes that prohibit ``unconscionable'' conduct but do not also 
contain a specific reference to ``unfair,'' ``deceptive,'' or 
``abusive'' conduct. A consumer advocate commenter stated that such 
``unconscionability'' laws should be included, pointing to what it 
described as the similarity between the standards of 
``unconscionability'' and ``unfairness'' under UDAP law as recognized 
by courts. An industry commenter stated that the Bureau should not 
include State ``unconscionability'' laws.
    A joint comment letter from State regulators stated that proposed 
appendix A, which lists State laws that are included as ``covered 
laws'' under Sec.  1092.201(c)(4), did not adequately represent State 
consumer protection efforts, and contained laws that may be 
inapplicable or outdated in certain States. The comment did not specify 
any inapplicable or outdated State laws, but referred to payday lending 
laws in States that have recently enacted usury laws that cap rates at 
36 percent. A consumer advocate commenter stated that proposed appendix 
A should be expanded to include other laws, specifically the Federal 
Racketeer Influenced and Corrupt Organizations Act (``RICO'') and State 
counterparts. This consumer advocate commenter also stated that the 
rule should require that the Bureau periodically seek comment and 
update appendix A. An industry commenter stated that proposed appendix 
A was unmanageably large.
    In the notice of proposed rulemaking the Bureau specifically sought 
comment on whether Tribal UDAP/UDAAP laws should be included among the 
list of ``covered laws,'' and if so, which specific Tribal UDAP/UDAAP 
laws should be included in the list. A Tribal commenter stated that 
proposed appendix A should be expanded to include laws that have been 
enacted or may be enacted by federally recognized Indian tribes on the 
grounds that doing so would reflect the status of Tribal governments as 
equals to State governments under the Dodd-Frank Act. The commenter did 
not state which specific Tribal UDAP/UDAAP laws should be included.
Response to Comments Received
    For the reasons given in the description of the proposal above, the 
Bureau is finalizing Sec.  1092.201(c)'s requirement that a law listed 
in Sec.  1092.201(c)(1) through (6) would qualify as a covered law only 
to the extent that the violation of law found or alleged arises out of 
conduct in connection with the offering or provision of a consumer 
financial product or service. The Bureau does not choose to use the 
final rule as the vehicle for determining the circumstances under which 
violations of covered laws arise out of conduct ``in connection with 
the offering or provision of a consumer financial product or service.'' 
The term ``consumer financial product or service'' has a well-
established statutory definition.\171\ While the question of whether a 
legal violation related to the offering or provision of a consumer 
financial product or service depends on the particular facts and 
circumstances involved, the answer to that question should be clear in 
most cases. The Bureau declines to provide further, general guidance on 
this issue in the context of this rulemaking. If a person has a good 
faith basis to believe that an order issued against it does not qualify 
as a ``covered order'' because it does not arise out of conduct in 
connection with the offering or provision of a consumer financial 
product or service, the person could choose not to register that order 
and instead submit a notification under Sec.  1092.202(g). As explained 
in the section-by-section analysis of Sec.  1092.202(g), in the event 
of a non-frivolous filing under that provision, the Bureau would not 
bring an enforcement action against the person based on the person's 
failure to register the order unless the Bureau first notifies the 
person that the Bureau believes registration is required and provides 
the person with a reasonable opportunity to comply with Sec.  1092.202.
---------------------------------------------------------------------------

    \171\ See 12 U.S.C. 5481(5); see also 12 U.S.C. 5481(15) 
(defining ``financial product or service'').
---------------------------------------------------------------------------

    The Bureau is finalizing a definition of ``covered law'' at Sec.  
1092.201(c)(3) that includes the prohibition on unfair or deceptive 
acts or practices under FTC Act section 5, as well as any rule or order 
issued for the purpose of implementing that prohibition. As described 
in part IV, among other things, such orders may be probative of 
violations of Federal consumer financial law, including CFPA sections 
1031 and 1036(a)(1)(B). Such orders also may indicate more systemic 
problems at an entity that may impact the offering or provision of 
consumer financial products or services, and will inform the Bureau's 
exercise of its various rulemaking, supervisory, enforcement, consumer 
education, and other functions. The Bureau does not see the force of 
any argument that including FTC Act section 5 in the definition of 
``covered law'' usurps the role of the FTC in issuing, enforcing, or 
interpreting the FTC's public orders. Rather, the Bureau's rule is 
intended to collect and potentially publish information regarding such 
orders where they are relevant to the Bureau's assessment of risks to 
consumers within its jurisdiction, as well as information about the 
covered nonbanks that are

[[Page 56055]]

subject to such orders. The Bureau will continue to coordinate with the 
FTC as required by the CFPA, including CFPA sections 1024(c)(3) and 
1061(b)(5).\172\
---------------------------------------------------------------------------

    \172\ 12 U.S.C. 5514(c)(3), 5581(b)(5).
---------------------------------------------------------------------------

    The final rule requires registration in connection with orders 
issued under State laws prohibiting unfair, deceptive, or abusive acts 
or practices that are identified in appendix A to part 1092, to the 
extent that the violation of law found or alleged arises out of conduct 
in connection with the offering or provision of a consumer financial 
product or service. The Bureau declines to finalize a definition of 
``covered laws'' that does not include State laws. The Bureau 
concludes, as stated by consumer advocate commenters, that violations 
of both Federal and State consumer financial laws may be probative of 
heightened risks for consumers and borrowers. In particular, the Bureau 
concludes that orders based on violations of the State laws described 
in Sec.  1092.202(c)(4) through (6) are likely to be probative of risk 
to consumers.
    The final rule will not thereby empower the Bureau to enforce or 
interpret State laws (or orders). In particular, the Bureau does not 
intend to assert any jurisdiction to enforce the State laws described 
in Sec.  1092.201(c)(4) through (6) and appendix A. For the reasons 
described in more detail in part IV(C), the Bureau concludes orders 
based on violations of these State laws are probative of the types of 
risks to consumers that the CFPA authorizes the Bureau to monitor, but 
the Bureau does not assert that it may directly enforce any of these 
laws. Rather, the final rule includes these State laws within the 
definition of ``covered law'' in order to define the covered orders 
that will require covered nonbanks to report identifying, 
administrative, and order information to the nonbank registry.
    The Bureau finalizes its conclusion in the notice of proposed 
rulemaking \173\ that collecting and registering public agency and 
court orders imposing obligations based upon violations of consumer 
law, including applicable State laws, would assist with monitoring for 
risks to consumers in the offering or provision of consumer financial 
products and services. The CFPA does not confine the Bureau to 
monitoring or supervising for risks related to violations of Federal 
consumer financial law. Neither the Bureau's authority to monitor for 
risks to consumers in the offering or provision of consumer financial 
products or services under 12 U.S.C. 5512(c) nor the Bureau's 
supervisory authorities under 12 U.S.C. 5514 are limited solely to 
assessing entities' compliance with Federal consumer financial law. 
Instead, the Bureau is charged with monitoring for risks to consumers 
more broadly in the offering or provision of consumer financial 
products or services, including developments in markets for such 
products or services.\174\ In allocating its resources to perform 
market monitoring, the Bureau may consider ``the legal protections 
applicable to the offering or provision of a consumer financial product 
or service, including the extent to which the law is likely to 
adequately protect consumers.'' \175\ The types of ``legal 
protections'' to be considered by the Bureau are not restricted to 
protections under Federal law.
---------------------------------------------------------------------------

    \173\ 88 FR 6088 at 6094-6098.
    \174\ See 12 U.S.C. 5512(c)(1).
    \175\ 12 U.S.C. 5512(c)(2)(C).
---------------------------------------------------------------------------

    Likewise, the CFPA requires that the Bureau prioritize the use of 
its supervisory authority ``in a manner designed to ensure that such 
exercise . . . is based upon the assessment by the Bureau of the risks 
posed to consumers in the relevant product markets and geographic 
markets.'' \176\ In addition, the Bureau is tasked with requiring 
reports and conducting examinations under 12 U.S.C. 5514 for purposes 
not just of ``assessing compliance with the requirements of Federal 
consumer financial law,'' \177\ but also of ``obtaining information 
about the activities and compliance systems and procedures of'' persons 
described in 12 U.S.C. 5514(a) \178\ and ``detecting and assessing 
risks to consumers and to markets for consumer financial products and 
services.'' \179\ And the CFPA authorizes the Bureau to issue rules 
under 12 U.S.C. 5514(b)(7)(A) to ``facilitate supervision of persons 
described in [12 U.S.C. 5514(a)(1)] and assessment and detection of 
risks to consumers,'' and under 12 U.S.C. 5514(b)(7)(B) ``for the 
purposes of facilitating supervision of such persons and assessing and 
detecting risks to consumers.'' None of these provisions state or even 
imply that the Bureau may not collect information regarding orders 
issued under State law that are probative of risks to consumers in the 
offering or provision of consumer financial products and services 
within the scope of the Bureau's jurisdiction. The Bureau has its own 
expertise and authorities with respect to such risks. The Bureau needs 
to collect information regarding such risks as relevant to its own 
purposes and the exercise of its own powers as provided under Federal 
law.
---------------------------------------------------------------------------

    \176\ 12 U.S.C. 5514(b)(2). See the discussion of this provision 
in parts II, III, and IV(B) above.
    \177\ 12 U.S.C. 5514(b)(1)(A).
    \178\ 12 U.S.C. 5514(b)(1)(B).
    \179\ 12 U.S.C. 5514(b)(1)(C).
---------------------------------------------------------------------------

    The imposition of Sec.  1092.204's written-statement requirements 
in connection with orders issued under State UDAP/UDAAP laws is 
similarly appropriate and will further the purposes of those 
requirements, as described in part IV(D) above and the section-by-
section discussion of Sec.  1092.204 below. Violations of such orders 
may be probative of heightened risks for consumers and borrowers that 
are relevant to the Bureau's exercise of its supervisory authority; 
thus, for the reasons discussed in part IV(D) above and the section-by-
section discussion of Sec.  1092.204 below, the written-statement 
requirements will facilitate the Bureau's supervision of supervised 
registered entities subject to such orders. The information collected 
under Sec.  1092.204 regarding risks to consumers that may be 
associated with the orders, including potential violations of CFPA 
sections 1031 and 1036, and the applicable supervised registered 
entity's compliance systems and procedures will be relevant to the 
Bureau's supervisory authority even where those risks are associated 
with orders issued under State UDAP/UDAAP laws. In addition, for the 
reasons discussed in part IV(D) above and the section-by-section 
discussion below, Sec.  1092.204's requirements with respect to orders 
issued under State UDAP/UDAAP laws will also help ensure that 
supervised registered entities are legitimate entities and are able to 
perform their obligations to consumers. Contrary to commenters' 
suggestions, the Bureau is not adopting the written-statement 
requirements to administer or enforce State laws or orders issued under 
such laws, but rather to further its statutory purposes under CFPA 
section 1024(b)(7)(A)-(C) with respect to risks to consumers that are 
relevant under Federal law, that are associated with entities that are 
subject to the Bureau's supervisory and examination authority under 
CFPA section 1024(a), and that arise in connection with the offering or 
provision of consumer financial products and services subject to the 
Bureau's jurisdiction.
    The Bureau concludes that the final rule will not result in the 
Bureau usurping the role of any State or local agency in issuing, 
enforcing, or interpreting State law or orders issued or obtained by a 
State or local agency. Nor will the final rule violate principles of 
federalism or lead to the Bureau supplanting the proper role of State 
or other regulators with respect to such

[[Page 56056]]

orders. The final rule requires that covered nonbanks submit 
identifying information and other specified information related to such 
orders, but the Bureau's collection of that information via the nonbank 
registry will not interfere with any State or local agency's own 
actions related to enforcement of such orders.\180\ To the contrary, 
the Bureau concludes that including the State laws described in Sec.  
1092.201(c)(4) through (6) within the definition of ``covered law'' 
will promote interagency coordination and cooperation among the various 
Federal, State, and local agencies that have an interest in financial 
consumer protection because the Bureau intends to establish under the 
rule a public, up-to-date, and easily accessible and searchable 
registry that contains relevant and useful information about covered 
orders and the covered nonbanks that are subject to them.
---------------------------------------------------------------------------

    \180\ See 12 U.S.C. 5551(a)(1) (``This title, other than 
sections 1044 through 1048, may not be construed as annulling, 
altering, or affecting, or exempting any person subject to the 
provisions of this title from complying with, the statutes, 
regulations, orders, or interpretations in effect in any State, 
except to the extent that any such provision of law is inconsistent 
with the provisions of this title, and then only to the extent of 
the inconsistency.'') (emphasis added); see also 12 U.S.C. 
5552(d)(1) (``No provision of this section shall be construed as 
altering, limiting, or affecting the authority of a State attorney 
general or any other regulatory or enforcement agency or authority 
to bring an action or other regulatory proceeding arising solely 
under the law in effect in that State.'').
---------------------------------------------------------------------------

    As discussed in part IV and in this section-by-section discussion, 
violations of covered laws are likely to be probative of the type of 
risk to consumers the Bureau is tasked with monitoring. The Bureau does 
not intend to utilize the final rule or the nonbank registry 
established under subpart B as a mechanism to opine regarding the 
proper application of any particular State law to covered nonbanks or 
any legal defenses, such as preemption, that might have been available 
to a covered nonbank. The Bureau concludes that, where all of the 
criteria established by the rule for registration of a covered order 
have been met, including that an applicable agency or court has issued 
or obtained a final and otherwise covered order against a covered 
nonbank based on one or more violations by the covered nonbank of a 
State law described at Sec.  1092.201(c)(4) through (6), registration 
in connection with that covered order would serve the purposes of the 
rule. If a covered nonbank believes in good faith that any particular 
order is not a covered order, it may submit a notification under 
Sec. Sec.  1092.202(g) and 1092.204(f).
    The Bureau concludes that the final rule will not cause covered 
nonbanks to pay inappropriate attention to compliance with the types of 
State laws identified at Sec.  1092.201(c)(4) through (6).\181\ First, 
an entity can (and should) comply with the law whether or not the 
Bureau is monitoring it, and other agencies also monitor compliance 
with covered orders issued or obtained under these State laws. Thus, 
covered nonbanks should already be dedicating appropriate resources to 
ensure compliance with such State laws, and the Bureau does not agree 
that the registration components of the rule will distort compliance 
programs, lead to compliance programs becoming deprioritized, or lead 
to related additional risks or costs for consumers. Likewise, were the 
Bureau to publish the information collected as described under Sec.  
1092.205, the Bureau does not believe such publication would provide an 
inappropriate incentive to dedicate unnecessary resources to compliance 
with these State laws. By definition, the covered orders that would be 
made available on the registry are already published or required to be 
published (Sec.  1092.201(e) and (m)); therefore, republication of 
those orders on the nonbank registry by the Bureau will not provide a 
meaningful incentive to covered nonbanks to reallocate their compliance 
resources.
---------------------------------------------------------------------------

    \181\ With respect to one commenter's reference to ``local 
laws,'' Sec.  1092.201(c)'s definition of ``covered law'' refers to 
specific types of Federal and State laws but does not include any 
laws issued by local agencies. Therefore, an order that imposes 
applicable obligations on the covered nonbank based solely on 
alleged violations of a law issued by a local agency that does not 
qualify as a ``covered law'' under Sec.  1092.201(c) would not 
satisfy Sec.  1092.201(e)(1)(iv), and therefore would not be a 
``covered order'' under the final rule. However, an order issued by 
a local agency (as that term is defined at Sec.  1092.201(i)) under 
a State law that did qualify as a ``covered law'' under Sec.  
1092.201(c)(4) through (6) might constitute a ``covered order'' 
under Sec.  1092.201(e) if the other elements of that provision were 
also satisfied.
---------------------------------------------------------------------------

    Second, even if a covered nonbank were to view the final rule as a 
reason to dedicate additional resources to complying with the State 
laws described at Sec.  1092.201(c)(4) through (6), so much the better. 
Enhanced compliance with those State laws, while not a goal of the 
final rule, will also likely reduce risk to consumers in the offering 
or provision of consumer financial products and services within the 
scope of the Bureau's jurisdiction. The Bureau does not agree that it 
should refrain from collecting or publishing information that may help 
it monitor for risks to consumers on the grounds that its efforts might 
also have the ancillary benefit of inducing covered nonbanks to comply 
with the described State consumer protection laws.
    The proposal's requirements to submit information in connection 
with covered orders were specific to the proposal and were not intended 
to impose any requirements on a covered nonbank's compliance management 
system or any of the covered nonbank's internal affairs, or to require 
any particular approach of allocating responsibility for complying with 
covered orders or with the law generally. The Bureau understands that 
compliance management at covered nonbanks will likely be managed 
differently from entity to entity and that compliance management 
systems will and should be adapted to a covered nonbank's business 
strategy and operations. The proposal did not purport to impose any 
restrictions on the manner in which covered nonbanks address such 
matters.
    The final rule clearly establishes which laws are ``covered laws.'' 
The Bureau has reviewed the State laws described in appendix A to part 
1092 and has assessed whether they are probative of risk to consumers 
and otherwise should be included in appendix A at this time. State laws 
that are not listed in appendix A to part 1092 and not otherwise 
described at Sec.  1092.201(c)(4) through (6) are not covered laws 
under the final rule. Therefore, commenters' concerns that the Bureau 
might treat as covered laws certain State ``administrative'' or other 
laws not described in Sec.  1092.201(c)(4) through (6) are misplaced. 
As provided at Sec.  1092.202(e)(4), an order that does not impose 
obligations that are described in Sec.  1092.202(e)(3) on the covered 
nonbank based on an alleged violation of a ``covered law'' is not a 
``covered order'' under the final rule. But an order that does impose 
such obligations based on a violation of a covered law may fall under 
Sec.  1092.202(e)(3), even if the State agency issued its order under 
authority granted by other provisions of law. Additional discussion 
regarding when obligations are imposed ``based on'' violations of a 
covered law is contained in the section-by-section discussion of Sec.  
1092.201(e) below.
    Commenters did not provide any citations for specific State laws 
that should either be added to or deleted from appendix A to part 1092. 
However, the Bureau has reviewed appendix A as proposed and is 
finalizing an appendix A to part 1092 that contains both additions and 
deletions from the version proposed. The Bureau is listing these 
additional statutes in appendix A, and thus including them in the final 
rule's

[[Page 56057]]

definition of covered law, for the reasons discussed in the description 
of the proposal above with respect to the inclusion of other State laws 
in the proposed appendix A. As with the State laws that were included 
in the version of appendix A contained in the proposed rule, the Bureau 
believes that violation of the additional State UDAP/UDAAP laws 
included in the final appendix A to part 1092 that prohibit unfair, 
deceptive, or abusive acts or practices in connection with consumer 
financial industries or markets and in connection with the offering or 
provision of consumer financial products or services would be probative 
of potential violations of CFPA sections 1031 and 1036, and also of 
other related risks to consumers within the scope of the Bureau's 
jurisdiction. The Bureau believes that omitting these industry specific 
statutes from the definition of ``covered law'' may cause the 
information submitted to the proposed registry to be incomplete.
    The Bureau is also finalizing several minor revisions to appendix A 
to part 1092 in order to correct several clerical errors in the 
proposed rule, such as duplicate listings, and to reflect certain 
changes to the State laws, such as the renumbering and repeal of 
certain provisions.
    Other than these revisions, the Bureau declines to finalize other 
changes to appendix A at this time. The Bureau concludes appendix A to 
the final rule, as revised from the proposal in the ways discussed 
above, is appropriate and is not so large as to be unusable or 
unwieldy. Covered nonbanks should be able to quickly refer to appendix 
A in order to help determine whether any particular State law is a 
``covered law.''
    As the Bureau indicated in the notice of proposed rulemaking, 
orders based on conduct that violates State unconscionability laws may 
be probative of risk to consumers. But the Bureau declines at this time 
to include State unconscionability laws in appendix A to the final 
rule. Likewise, the Bureau declines at this time to include RICO laws 
in appendix A to the final rule. And the Bureau also declines to 
include in appendix A State payday lending laws imposing usury limits. 
Violations of State unconscionability, RICO, and usury laws may be 
indicative of risk to consumers within the Bureau's jurisdiction, 
especially in situations where the applicable violation of law found or 
alleged arises out of conduct in connection with the offering or 
provision of a consumer financial product or service. But unlike the 
State UDAP/UDAAP laws included in appendix A, State unconscionability, 
RICO, and usury laws are generally not modeled after FTC Act section 5 
or CFPA sections 1031 and 1036(a)(1)(B), and the Bureau at this time 
has not determined whether such laws, as a class, are generally 
sufficiently similar in scope to FTC Act section 5 or CFPA sections 
1031 and 1036(a)(1)(B) to warrant inclusion in appendix A. Considering 
RICO laws in particular, they often prohibit a wide range of criminal 
activity, including kidnapping, robbery, and dealing in narcotic 
drugs.\182\ The Bureau is concerned that including such laws as 
``covered laws'' would result in an overinclusive and thus less useful 
and more burdensome registry.
---------------------------------------------------------------------------

    \182\ See, e.g., 18 U.S.C. 1961.
---------------------------------------------------------------------------

    Also, as the Bureau indicated in the notice of proposed rulemaking, 
orders based on conduct that violates certain Tribal laws may be 
probative of risk to consumers. But the Bureau declines at this time to 
include such Tribal laws in appendix A to the final rule. The Bureau 
finalizes its preliminary conclusion in the proposal \183\ that 
considerations of administrative efficiency favor focusing on other 
orders.
---------------------------------------------------------------------------

    \183\ See 88 FR 6088 at 6107.
---------------------------------------------------------------------------

    The Bureau intends to monitor the orders submitted under the final 
rule and may determine at a later date to expand appendix A to include 
the categories of laws discussed above or other laws. The Bureau also 
agrees that it may prove useful to periodically review and update 
appendix A in order to enhance the usefulness and effectiveness of the 
nonbank registry and the information it collects. However, the Bureau 
declines to adopt such a requirement in the final rule obligating 
itself to do so. Among other things, such a requirement is unnecessary 
and would complicate the Bureau's administration of the nonbank 
registry.
    Comments regarding the scope of the written-statement requirements 
are addressed in the section-by-section discussion of Sec.  1092.204 
below.
Final Rule
    For the reasons set forth above, the Bureau is finalizing Sec.  
1092.201(c) as proposed, with minor technical edits. In addition, for 
the reasons described above, the Bureau is finalizing appendix A to 
part 1092 with several changes from the proposed version. Section 
1092.201(c)(4) defines the term ``covered law'' to include a State law 
prohibiting unfair, deceptive, or abusive acts or practices that is 
identified in appendix A.
Section 1092.201(d) Covered Nonbank
Proposed Rule
    The proposal would have defined the term ``covered nonbank'' to 
mean a covered person \184\ that does not fall into one of five 
categories. First, the Bureau proposed to exclude from the definition 
insured depository institutions, insured credit unions, or related 
persons. The Bureau considered proposing to collect information about 
relevant orders in place against such persons under its authority to 
issue rules mandating collection of information set forth in CFPA 
section 1022(c)(4)(B)(ii). While the Bureau noted that it might at some 
point consider collecting or publishing the information described in 
the proposal from such persons, the Bureau believed that there is 
currently greater need to collect this information from the nonbanks 
under its jurisdiction. Among other things, the identity and size of 
all insured depository institutions and insured credit unions is known 
to the Bureau due to registration regimes maintained by the prudential 
regulators, which track and make public such information. Also, there 
are only four prudential regulators, and they regularly publish their 
consumer financial protection orders. In contrast, the Bureau explained 
that comprehensive, readily accessible information is currently lacking 
about the identity of, and orders issued against, nonbanks subject 
either to the Bureau's market-monitoring authority or to its 
supervisory authority across the various markets for consumer financial 
products and services. As a result, the Bureau believed that there is a 
unique need to identify nonbanks subject to orders through this 
proposed registry. In addition, the proposal would have conformed with 
the Bureau's registration authority under CFPA section 1022(c)(7), 
which states that the Bureau may impose registration requirements 
applicable to a covered person, other than an insured

[[Page 56058]]

depository institution, insured credit union, or related person.\185\
---------------------------------------------------------------------------

    \184\ As provided in proposed Sec.  1092.101(a), the proposal 
would have defined the term ``covered person'' to have the same 
meaning as in 12 U.S.C. 5481(6). The proposal would not have defined 
``service providers,'' as defined in 12 U.S.C. 5481(26), as covered 
nonbanks per se. Entities that are service providers, however, may 
nevertheless also be covered persons under the CFPA. Among other 
things, a person that is a service provider shall be deemed to be a 
covered person to the extent that such person engages in the 
offering or provision of its own consumer financial product or 
service. See 12 U.S.C. 5481(26)(C). And a service provider that acts 
as a service provider to its covered person affiliate is itself 
deemed to be a covered person as provided in 12 U.S.C. 5481(6)(B).
    \185\ The Bureau explained that an affiliate of an insured 
depository institution, insured credit union, or related person 
could be subject to the proposed rule if it is not itself an insured 
depository institution, insured credit union, or related person.
---------------------------------------------------------------------------

    Second, the proposal would have excluded from the definition of the 
term ``covered nonbank'' a ``State,'' as defined in CFPA section 
1002(27)--a term that includes ``any federally recognized Indian tribe, 
as defined by the Secretary of the Interior'' under section 104(a) of 
the Federal Recognized Indian Tribe List Act of 1994, 25 U.S.C. 
5131(a).\186\ The Bureau has other avenues of collaborating with State 
partners (including Tribal partners) and, out of considerations of 
comity, did not seek to subject them to an information collection 
requirement in the proposal.
---------------------------------------------------------------------------

    \186\ 12 U.S.C. 5481(27).
---------------------------------------------------------------------------

    Third, the proposal excluded natural persons from the definition of 
``covered nonbank.'' The Bureau was not proposing to impose subpart B's 
registration requirements on natural persons, even though natural 
persons may be covered persons and may be subject to the types of 
orders described in the proposal. (For example, a sole proprietor not 
incorporated as a legal entity could qualify as a covered person.) 
Under the proposed exclusion, for example, natural persons subject to 
orders issued under FTC Act section 5, removal and prohibition orders 
or orders assessing civil money penalties issued by an appropriate 
Federal banking agency under section 8 of the Federal Deposit Insurance 
Act,\187\ or State licensing orders or orders issued under the S.A.F.E. 
Mortgage Licensing Act of 2008 \188\ would not be subject to the 
proposal's registration requirements. The ``natural person'' exception 
in proposed Sec.  1092.201(c)(3) was intended only to exclude 
individual human beings from the definition of ``covered nonbank.'' The 
definition of ``covered nonbank'' would have included trusts and other 
entities that meet the definition of ``covered person'' under CFPA 
section 1002(6).\189\ The Bureau was primarily interested in obtaining 
information regarding orders that apply to entities because it believed 
such orders will be most useful in identifying relevant risks to 
consumers. The Bureau believed that many of the agency and court orders 
enforcing the law issued against individuals are highly specific to the 
facts and circumstances relevant to the individual's conduct and are 
less likely to implicate broader risks to consumers and markets. In 
addition, the Bureau was primarily interested in obtaining and 
publishing registration information regarding nonbank entities that are 
subject to its jurisdiction, which among other things would enable 
consumers to better identify such entities and would provide 
information to the public and other regulators. The Bureau was 
concerned that, if the Bureau should extend the registration 
requirement to natural persons, the information provided would be less 
relevant to consumers and the other users of the registry. Therefore, 
the Bureau believed that the potential benefit of extending the 
registration requirement to natural persons likely would not justify 
the additional Bureau resources that would need to be allocated to 
implement and administer such an expansion of the Bureau's registry. 
The Bureau also believed that proposed Sec.  1092.203's requirements to 
designate one or more attesting executives and submit written 
statements would not be appropriate for natural persons.
---------------------------------------------------------------------------

    \187\ 12 U.S.C. 1818.
    \188\ 12 U.S.C. 5101 et seq.
    \189\ See 12 U.S.C. 5481(6). See also 12 U.S.C. 5481 (defining 
the term ``person'' to include, in addition to individuals, any 
``partnership, company, corporation, association (incorporated or 
unincorporated), trust, estate, cooperative organization, or other 
entity'').
---------------------------------------------------------------------------

    Fourth, the proposal excluded from the definition of ``covered 
nonbank'' a motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both, within the meaning of 12 U.S.C. 5519(a), 
except to the extent such a person engages in functions that are 
excepted from the application of 12 U.S.C. 5519(a) as described in 12 
U.S.C. 5519(b). CFPA section 1029 provides an exclusion from the 
Bureau's rulemaking authority for certain motor vehicle dealers.\190\ 
However, CFPA section 1029(b) exempts certain persons from this 
exclusion. Persons covered by section 1029(a) would have qualified as 
``covered nonbanks'' under the proposal so long as they engage in the 
functions described in section 1029(b)--in which case they would be 
``covered nonbanks.'' Proposed Sec.  1092.201(e), discussed below, 
would have further provided that the only orders issued to such motor 
vehicle dealers that would require registration would be those issued 
in connection with the functions that are excepted from the application 
of 12 U.S.C. 5519(a) as described in 12 U.S.C. 5519(b).
---------------------------------------------------------------------------

    \190\ 12 U.S.C. 5519 (``Exclusion for Auto Dealers'').
---------------------------------------------------------------------------

    Fifth, the proposal excluded a person from the definition of 
``covered nonbank'' if the person qualifies as a covered person based 
solely on conduct that is the subject of, and that is not otherwise 
exempted from, an exclusion from the Bureau's rulemaking authority 
under 12 U.S.C. 5517.\191\ This provision would have clarified that 
persons whose activities are wholly excluded from the rulemaking 
authority of the Bureau under one or more of the provisions of section 
1027 of the CFPA are not ``covered nonbanks.'' However, where the CFPA 
provides that any of the activities engaged in by such persons are 
subject to the Bureau's rulemaking authority, this limitation would not 
have excluded the person from qualifying as a ``covered nonbank.'' For 
example, the Bureau explained, CFPA section 1027(l)(1) provides an 
exclusion from the Bureau's rulemaking authority for certain persons 
engaging in certain activities relating to charitable 
contributions.\192\ Under the proposal, a covered person would not have 
been deemed a ``covered person'' if it qualifies for this statutory 
exclusion and is not otherwise exempt from it. But CFPA section 
1027(l)(2) exempts certain activities from this statutory exclusion by 
providing that ``the exclusion in [CFPA section 1027(l)(1)] does not 
apply to any activities not described in [CFPA section 1027(l)(1)] that 
are the offering or provision of any consumer financial product or 
service, or are otherwise subject to any enumerated consumer law or any 
law for which authorities are transferred under subtitle F or H.'' 
\193\ As proposed, persons described in CFPA section 1027(l)(1) 
engaging in the activities described therein would have qualified as 
``covered nonbanks'' so long as they engage in any of the activities 
described in CFPA section 1027(l)(2), and they would thus be subject to 
all of the information-collection requirements of the rule applicable 
to ``covered nonbanks,'' regardless of whether the applicable ``covered 
order'' addressed the conduct subject to the statutory exclusion.
---------------------------------------------------------------------------

    \191\ 12 U.S.C. 5517.
    \192\ 12 U.S.C. 5517(l)(1) (``Exclusion for Activities Relating 
to Charitable Contributions'').
    \193\ 12 U.S.C. 5517(l)(2).
---------------------------------------------------------------------------

    Among other things, the Bureau sought comment regarding the overall 
scope of the proposed definition of ``covered nonbank,'' including 
whether the definition should be expanded or limited in light of the 
purposes and objectives of subpart B. The Bureau further sought comment 
on whether a more limited or expanded approach to the registration of 
covered persons would be appropriate instead of the proposed 
requirements, whether it should consider any other modifications to the 
scope of the rule, and how such

[[Page 56059]]

modifications would match the Bureau's policy goals.
Comments Received
    The Bureau specifically sought comment as to whether it should 
adopt an alternative approach that would limit all of the proposal's 
registration requirements to covered persons that are subject to the 
Bureau's supervision and examination authority under CFPA section 
1024(a). An industry commenter supported limiting the registration 
requirements to entities with annual receipts of more than $10 million, 
which is the Bureau's larger participant threshold for the consumer 
debt collection market under section 1024(a).\194\ While conceding that 
this approach would limit the number of orders subject to the rule, the 
commenter stated that it would greatly reduce the compliance burden on 
small businesses.
---------------------------------------------------------------------------

    \194\ See 12 U.S.C. 5514(a)(1)(B); 12 CFR 1090.105.
---------------------------------------------------------------------------

    A consumer advocate commenter stated that the proposal should be 
modified in order to clarify that schools and State-affiliated student 
loan servicers satisfy the definition of ``covered nonbanks.'' The 
commenter stated that such clarification was particularly desirable in 
light of the exception for States from the definition of ``covered 
nonbank,'' as according to the commenter, certain entities accused of 
illegal conduct often falsely assert that they are agents or appendages 
of States.
    The Bureau specifically requested comment on whether to include 
natural persons in the term ``covered nonbank,'' even though natural 
persons may be covered persons and may be subject to the types of 
orders described in the proposal. A consumer advocate commenter stated 
that the proposal should be modified in order to include natural 
persons who otherwise meet the definition of ``covered person.'' The 
commenter stated that including natural persons would provide consumers 
with an additional resource to identify bad actors in consumer 
financial services.
    Commenters, including the SBA Office of Advocacy, stated that the 
proposal was insufficiently clear with respect to affiliates of insured 
depository institutions and insured credit unions. Commenters noted 
that certain bank holding companies and other nonbank affiliates of 
such entities meet the CFPA's definition of ``covered person,'' \195\ 
but they would not have fallen within the exemptions to the term 
``covered nonbank'' provided in proposed Sec.  1092.201(d). Commenters 
requested clarification as to which affiliates of banks and credit 
unions would qualify as ``covered nonbanks'' under the proposal. One 
industry commenter stated that the Bureau should ensure that the 
regulatory text expressly clarified the application of this definition 
to bank affiliates. Industry commenters also stated that the Bureau 
should exempt some or all of these bank-affiliated ``covered persons'' 
from the scope of the definition, and industry commenters stated that 
if the Bureau were to include affiliates of insured depository 
institutions and insured credit unions in the definition of the term 
``covered nonbank,'' the Bureau should issue a supplementary proposal 
in order to provide for additional notice and comment on that approach. 
A consumer advocate commenter stated that the Bureau should take an 
expansive approach in addressing this question.
---------------------------------------------------------------------------

    \195\ 12 U.S.C. 5481(6).
---------------------------------------------------------------------------

    Several industry and consumer advocate commenters approved of the 
proposal to collect and publish information about nonbanks, stating 
that the proposed registry would shed light on the large and growing 
nonbank financial sector. An industry commenter and a consumer advocate 
commenter stated that the proposed registry would help the Bureau 
identify nonbanks to bring under Bureau supervision. Industry 
commenters and a joint comment letter from members of Congress agreed 
that excepting banks and insured credit unions from the proposal was 
appropriate, although some commenters objected to the proposal's 
statement that the Bureau might consider including banks and credit 
unions in a future registry, stating that the Bureau lacked authority 
to do so or that collecting information from banks or credit unions 
would be unduly burdensome and duplicative. On the other hand, several 
commenters stated that the Bureau should not exempt banks and credit 
unions from the proposed rule's requirements. Industry commenters 
stated that this exemption was contrary to the proposal's rationale, 
and unfairly targeted nonbanks and put them at a competitive 
disadvantage. A consumer advocate commenter stated that the exemption 
was inconsistent with the publication of certain orders regarding 
nonbanks, and that nonbanks might attempt to evade the proposed rule's 
registration requirements by acquiring a banking charter.
    A joint letter from State regulators stated that States have not 
witnessed widespread issues with or a growing trend of recidivism among 
nonbanks that would necessitate the creation of the proposed nonbank 
registry, and stated that previous remarks by the Bureau's Director had 
not emphasized a recidivism problem among nonbanks. However, consumer 
advocate commenters stated that recidivism by nonbanks did pose risks 
to consumers and that the registry would help users identify such risks 
and would otherwise help prevent recidivism.
    While noting the exclusion of federally recognized tribes from the 
proposed definition, Tribal commenters suggested that the proposal's 
use of the term ``State'' to define the exemption from proposed Sec.  
1092.201(d)'s definition of ``covered nonbank'' was inadequate to 
protect Tribal sovereignty, and stated that the rule should adopt a 
more specific and clear exclusion for economic arms of the tribe, or 
for Tribal instrumentalities or entities wholly owned by tribes. These 
commenters asserted that tribes, as self-determining bodies, are the 
only ones competent to determine the status of an entity as enjoying 
Tribal sovereignty. Thus, in their view, U.S. government institutions--
whether the Bureau, other U.S. regulators, or U.S. courts--lack 
competence to make such determinations. Tribal commenters also stated 
that application of the rule to Tribal instrumentalities would expose 
Tribal treasuries to unfounded attacks that the registry would 
generate.
    Industry commenters stated that in addition to the exemption in 
proposed Sec.  1092.201(d)(1) for insured credit unions, the Bureau 
should also exempt from the definition of ``covered nonbank'' credit 
union service organizations (CUSOs). The commenters stated that CUSOs 
must register with the National Credit Union Administration (NCUA) and 
report financial activity, with annual affirmations and updates, that 
NCUA and State regulators regularly exercise established authority to 
request information regarding CUSO activity, that requiring 
registration of CUSOs would be duplicative and burdensome, and that 
consumers would be unlikely to find such registration useful.
    An industry commenter stated that the Bureau should exempt 
institutions that are supervised by the Farm Credit Administration from 
the definition of ``covered nonbank.'' The commenter stated that the 
reasons the proposal gives for excluding depository institutions and 
credit unions apply equally to Farm Credit institutions, and that such 
an exemption would be consistent with the unique treatment of such 
institutions under the CFPA.
    An industry commenter stated that the Bureau should exempt 
attorneys and law firms from the scope of the proposal

[[Page 56060]]

on the grounds that regulation of lawyers is properly placed not with 
the Bureau but with the judiciary and State bar associations, because 
of concerns that covered nonbanks that are attorneys or law firms could 
be required to divulge privileged communications between the lawyer and 
their client as well as information regarding their clients' 
confidential and proprietary business practices, and on the grounds 
that they are already heavily regulated and should otherwise not be 
subject to the rule.
    Two industry commenters stated that the Bureau should exempt 
mortgage lenders and mortgage services from the scope of the proposal, 
or at a minimum, exempt such entities where they have satisfied the 
existing NMLS requirements for mortgage lenders/servicers to disclose 
such agency and court orders to the NMLS. These commenters stated that 
the proposed rule would have a disproportionate burden on such entities 
and would be largely duplicative of the orders that such entities 
report to the NMLS.
Response to Comments Received
    Under the final rule, the Bureau will collect information under the 
nonbank registry in order to be informed about risks regarding a wide 
range of nonbank covered persons, and not just regarding the entities 
that are subject to its supervisory jurisdiction under CFPA section 
1024(a). The Bureau finalizes its conclusion in the proposal \196\ that 
collecting information from a wider range of covered persons is 
appropriate to achieve its market-monitoring objectives. The Bureau 
declines to finalize the alternative approach discussed in the notice 
of proposed rulemaking that would have limited the scope of the 
definition to covered persons that are subject to the Bureau's 
supervision and examination authority under CFPA section 1024(a). The 
Bureau's market-monitoring information collection authority under CFPA 
section 1022(c)(4)(B)(ii) applies to ``covered persons'' and ``service 
providers'' as defined at CFPA section 1002,\197\ and the Bureau's 
registration authority under CFPA section 1022(c)(7) applies to all 
covered persons ``other than an insured depository institution, insured 
credit union, or related person.'' \198\ The Bureau concludes that the 
information that will be collected under the nonbank registry will be 
useful for purposes beyond conducting its supervisory work, and that it 
should collect information in order to inform its regulatory, 
enforcement, and other functions, where the Bureau's authority extends 
to numerous entities that are not subject to its supervisory 
jurisdiction. Even with respect to informing the Bureau's supervisory 
work, it will be necessary to collect information from entities that 
are not subject to Bureau supervision under CFPA section 1024(a). For 
example, the Bureau could use information submitted to the nonbank 
registry to inform its decisions regarding whether to issue new larger 
participant rules under CFPA section 1024(a)(2) or whether to exercise 
its authority to designate a covered person for supervision because the 
Bureau has reasonable cause to determine that the covered person is 
engaging or has engaged in conduct that poses risk to consumers.\199\ 
Thus, the Bureau will need to be informed about risks to consumers 
arising with respect to entities that are not presently supervised.
---------------------------------------------------------------------------

    \196\ See 88 FR 6088 at 6109.
    \197\ See 12 U.S.C. 5481(6), (26); 12 U.S.C. 5512(c)(4)(B)(ii).
    \198\ See 12 U.S.C. 5512(c)(7).
    \199\ See 12 U.S.C. 5514(a)(1)(B), (C), (a)(2); 12 CFR part 
1091.
---------------------------------------------------------------------------

    The Bureau declines to adopt a registration threshold or other 
exception from the rule's registration requirements based upon annual 
receipts or other size considerations. That approach would lead to the 
omission of relevant covered nonbanks from the registry, which would 
mean that the Bureau would not be notified regarding the existence of 
such entities and would not learn that they were subject to a covered 
order. Such an exception would unnecessarily limit the information that 
is provided to the Bureau and provide the Bureau with only a partial 
view of related risks. The Bureau concludes that the limited burden 
that will be imposed on such entities due to such information-
collection requirements is warranted in light of the benefits to the 
Bureau and other users of the nonbank registry.\200\
---------------------------------------------------------------------------

    \200\ See also the section-by-section discussion of Sec.  
1092.201(q) below.
---------------------------------------------------------------------------

    The Bureau declines to use this rulemaking as an opportunity to 
finalize a position regarding whether any particular type of entity is 
a covered person or otherwise falls under the regulatory definition of 
the term ``covered nonbank.'' The Bureau expects all entities subject 
to its jurisdiction to assess their own compliance obligations and to 
comply with the law. An entity that believes it has a good faith basis 
that it is not a covered nonbank or supervised registered entity, or 
that an order is not a covered order, but has concerns about whether 
the Bureau would agree, may file a good faith notification under Sec.  
1092.202(g) or Sec.  1092.204(f).
    The Bureau declines at this time to include natural persons in the 
term ``covered nonbank.'' For the reasons discussed in the proposal, 
the Bureau is primarily concerned about the risk to consumers that is 
presented by entities that are not natural persons, although it may 
consider expanding the registry in future. As the Bureau discussed in 
its proposal, the ``natural person'' exception in Sec.  1092.201(c)(3) 
is intended only to exclude individual human beings from the definition 
of ``covered nonbank.'' The definition of ``covered nonbank'' would 
include trusts and other entities that meet the definition of ``covered 
person'' under CFPA section 1002(6).
    The Bureau declines to finalize an exemption for affiliates of 
insured depository institutions or insured credit unions from Sec.  
1092.201(d)'s definition of the term ``covered nonbank.'' (As discussed 
in the section-by-section discussion of Sec.  1092.201(q) below, that 
section's definition of the term ``supervised registered entity'' will 
not apply to an affiliate of an insured depository institution or 
insured credit union with total assets of more than $10 billion as 
described in CFPA section 1025(a).\201\ Therefore, such affiliates, 
even if they are ``covered nonbanks,'' are not subject to the final 
rule's written-statement requirements.) As the notice of proposed 
rulemaking indicated,\202\ an affiliate of an insured depository 
institution or insured credit union could be subject to the proposed 
rule if it is not itself an insured depository institution or insured 
credit union. While proposed Sec.  1092.201(d)(1) would have excluded 
from the definition of ``covered nonbank'' insured depository 
institutions and insured credit unions (as well as ``related persons,'' 
a term defined in CFPA section 1002(25)), the proposal did not contain 
an exemption from the definition of ``covered nonbank'' for affiliates 
of such persons where they otherwise would meet that definition. Like 
other covered nonbanks, such an affiliate would only be subject to the 
rule if it qualified as a ``covered nonbank'' under the criteria 
established in Sec.  1092.201(d), including the requirement that the 
affiliate satisfy the CFPA definition of the term ``covered person.'' 
With respect to the application of the final rule's written-statement 
requirements to such an affiliate, see the

[[Page 56061]]

section-by-section discussion of Sec.  1092.201(q) below.
---------------------------------------------------------------------------

    \201\ 12 U.S.C. 5515(a).
    \202\ 88 FR 6088 at 6108 n.139.
---------------------------------------------------------------------------

    The Bureau finalizes the approach described in the proposal. The 
Bureau acknowledges that, like the insured depository institutions and 
insured credit unions that are exempt from the definition of ``covered 
nonbank'' under Sec.  1092.201(d)(1), affiliates of those entities are 
subject to certain requirements imposed by the prudential regulators. 
And those regulators make certain information available to the public 
regarding such affiliates, including information regarding their 
identity and certain orders to which such affiliates are subject. 
Nevertheless, the Bureau concludes that requiring such affiliates that 
otherwise meet the definition of ``covered nonbank'' to submit 
information to the nonbank registry as required under Sec.  1092.202 
will serve the purposes of the final rule described in part IV above. 
Covered nonbanks that are affiliates of insured depository institutions 
and insured credit unions present a different set of risks to consumers 
than do insured depository institutions and insured credit unions. For 
example, they are generally neither chartered nor insured by the 
Federal Government; they are generally subject to a general corporate 
or business charter as opposed to a more restrictive banking or credit 
union charter; and they are generally not subject to the same 
restrictions on corporate form and powers that apply to insured 
depository institutions and insured credit unions.\203\
---------------------------------------------------------------------------

    \203\ See, e.g., 12 U.S.C 24a (authorizing financial 
subsidiaries of national banks to engage in nonbanking activities); 
12 U.S.C. 1843 (authorizing bank holding company interests in 
nonbanking organizations), 1864 (authorizing bank service companies 
to engage in nonbanking activities). See also, e.g., Patricia A. 
McCoy, 1 Banking Law Manual: Federal Regulation of Financial Holding 
Companies, Banks, and Thrifts (3rd ed. 2023) Sec. Sec.  5.02-5.03 
(discussing powers of national banks, bank holding companies, and 
financial holding companies). In addition, such affiliates are not 
subject by statute to the same frequency of examination by a Federal 
agency as are insured depository institutions. See 12 U.S.C. 1820(d) 
(generally requiring a ``full-scope, on-site examination of each 
insured depository institution'' either annually or, for certain 
small institutions, every 18 months). And certain affiliates are 
subject to a different system of ratings and supervision by the 
prudential regulators than are insured depository institutions. See, 
e.g., Large Financial Institution Rating System; Regulations K and 
LL, 83 FR 58724 (Nov. 21, 2018) (adopting ratings system for certain 
holding companies). See also the discussion below regarding credit 
union service organizations (CUSOs).
---------------------------------------------------------------------------

    The Bureau concludes that it is appropriate to distinguish 
affiliated nonbanks engaged in the offering or provision of consumer 
financial products and services from their affiliates that hold a bank 
or credit union charter, are federally insured, and are engaged 
directly in the business of banking or providing credit union services, 
and to register and collect additional information from affiliated 
nonbanks for the purposes of identifying and assessing risk to 
consumers.
    Furthermore, the approach taken in the final rule is consistent 
with CFPA section 1022(c)(7),\204\ which does not exempt such affiliate 
covered persons from the nonbank registration requirements that may be 
imposed by the Bureau under that statutory provision. In this case, 
Congress made a determination to extend the Bureau's registration 
authority over such persons, which are nonbanks subject to the Bureau's 
jurisdiction. Among other things, the Bureau needs to monitor risks to 
consumers presented by such nonbank affiliates in order to exercise its 
broad enforcement, supervisory, and regulatory authority over such 
persons. For example, Congress provided supervisory authority over 
nonbanks to the Bureau in order to ensure that the Bureau could 
exercise consistent Federal oversight of nondepository institutions 
based upon its assessment of the risk they pose to consumers.\205\ With 
respect to the affiliates of very large insured depository institutions 
and insured credit unions, Congress intended to address the preexisting 
``fragmented regulatory structure'' by creating ``one Federal regulator 
with consolidated consumer protection authority'' that would monitor 
such entities.\206\ Consistent with this goal, the final rule will 
create a unified registry that will identify covered nonbanks that 
themselves participate in the markets for consumer financial products 
and services, as well as the orders to which they are subject, whether 
or not those covered nonbanks happen to be affiliates of banks or 
credit unions.
---------------------------------------------------------------------------

    \204\ 12 U.S.C. 5512(c)(7).
    \205\ See S. Rep. No. 111-176, at 167 (2010) (``The authority 
provided to the Bureau in this section will establish for the first 
time consistent Federal oversight of nondepository institutions, 
based on the Bureau's assessment of the risks posed to consumers and 
other criteria set forth in this section.'').
    \206\ See S. Rep. No. 111-176, at 168 (2010).
---------------------------------------------------------------------------

    The Bureau is adopting an exception for insured depository 
institutions, insured credit unions, and related persons in Sec.  
1092.201(d)'s definition of the term ``covered nonbank.'' \207\ For the 
reasons stated in the proposal, the Bureau concludes that there is 
currently greater need to collect information from the nonbanks under 
its jurisdiction than from insured depository institutions, insured 
credit unions, and related persons, that there is a unique need to 
identify nonbanks subject to orders through the nonbank registry, and 
that the final rule will conform with the Bureau's registration 
authority under CFPA section 1022(c)(7), which states that the Bureau 
may impose registration requirements applicable to a covered person, 
other than an insured depository institution, insured credit union, or 
related person.\208\ As discussed at parts III and IV above, the Bureau 
is issuing this rule under separate authorities under CFPA sections 
1022 and 1024. However, for clarity, the final rule will not cover 
persons who are not subject to the Bureau's CFPA section 1022(c)(7)(A) 
authority.
---------------------------------------------------------------------------

    \207\ As explained below, the Bureau has adopted a revision to 
the proposed rule to clarify that a related person is excluded from 
the definition of ``covered nonbank'' only if the person qualifies 
as a ``covered person'' solely due to its related-person status.
    \208\ 12 U.S.C. 5512(c)(7).
---------------------------------------------------------------------------

    In addition, the Bureau concludes that the final rule will 
facilitate the purposes of the nonbank registry described in part IV 
above even without registering insured depository institutions, insured 
credit unions, or related persons at this time. In light of the modest 
obligations imposed under the final rule, the Bureau does not think 
that the final rule will cause nonbanks to undergo the expense and 
effort involved in obtaining a banking charter to avoid their 
registration obligations under the final rule. The Bureau chooses at 
this time not to collect information from banks not only because orders 
against insured depository institutions and insured credit unions are 
public or required to be public--as are all covered orders, as provided 
at Sec.  1092.201(e)--but also because the insured depository 
institutions and insured credit unions themselves are already subject 
to a comprehensive public Federal registration regime that identifies 
them to the public and is kept up to date.\209\ These requirements 
generally serve to distinguish orders issued against insured depository 
institutions and insured credit unions from orders issued against the 
covered nonbanks that the Bureau will register under the final 
rule.\210\
---------------------------------------------------------------------------

    \209\ See, e.g., 12 U.S.C. 1786(s) (insured credit unions), 
1818(u) (insured depository institutions).
    \210\ In addition, for the reasons discussed above and in the 
section-by-section discussion of Sec.  1092.201(q), affiliates of 
insured depository institutions and insured credit unions may 
qualify as ``covered nonbanks'' subject to the final rule, and 
affiliates of insured depository institutions and insured credit 
unions with total assets of $10 billion or less may qualify as 
``supervised registered entities'' subject to Sec.  1092.204. As 
discussed in those sections, the Bureau is concerned that such 
affiliates may present different types of risks to consumers than 
insured depository institutions and insured credit unions do.

---------------------------------------------------------------------------

[[Page 56062]]

    As discussed in part IV above, the registry will accomplish a 
number of goals, with a particular focus on monitoring for risks to 
consumers related to repeat offenders of consumer protection law. As 
discussed above, recidivism poses particular risks to consumers, and 
the Bureau believes that adoption of the final rule is appropriate for 
the purposes of monitoring for recidivism and publishing information 
that may help potential users of the nonbank registry identify 
recidivism by nonbanks. The joint comment letter from State regulators 
neither asserts nor demonstrates that recidivism by nonbanks does not 
present risks to consumers, and consumer advocate commenters stated 
that recidivism by nonbanks does present risks to consumers. The Bureau 
intends to use the information collected via the nonbank registry to 
help detect and assess relevant risks to consumers related to 
recidivism by nonbanks. In addition, the Bureau is adopting the final 
rule not just to monitor and deter recidivism by nonbanks but also more 
generally to serve all of the purposes described under part IV, 
pursuant to its legal authorities as described in part III. For 
example, as discussed in the section-by-section discussion of Sec.  
1092.205(a) below and elsewhere in this preamble, even one covered 
order may be probative of significant risk to consumers, and the 
written-statement requirements will serve the purposes described in 
part IV(D) whether or not an applicable supervised registered entity is 
subject to multiple covered orders. Thus, the Bureau believes its 
adoption of the final rule is appropriate even if recidivism among 
nonbanks currently presents only limited risks to consumers.
    Section 1092.201(d)(2) excludes from the definition of the term 
``covered nonbank'' a ``State,'' as defined in CFPA section 1002(27)--a 
term that includes ``any federally recognized Indian tribe, as defined 
by the Secretary of the Interior'' under section 104(a) of the Federal 
Recognized Indian Tribe List Act of 1994, 25 U.S.C. 5131(a). The Bureau 
declines to provide an express exemption from the final rule for Tribal 
instrumentalities or entities wholly owned by tribes because the Bureau 
does not choose to use this rulemaking as the vehicle for determining 
the circumstances under which tribally affiliated entities qualify as 
part of the tribe itself or are appropriately exempt from covered laws. 
At a minimum, where a covered nonbank becomes subject to a final court 
or agency order enforcing a covered law and otherwise satisfies the 
requirements of the rule, the Bureau believes that it is appropriate to 
register the entity and the order. The Bureau acknowledges that certain 
tribally affiliated entities may from time to time believe a court or 
agency has erred in imposing a covered order on them, based on grounds 
of sovereign immunity or otherwise. However, the Bureau believes that 
providing a blanket exemption for all such cases would improperly omit 
covered orders that are in fact probative of risk to consumers posed by 
entities subject to the Bureau's jurisdiction and thus should be 
registered under the final rule.
    In requiring registration in connection with such orders, the 
Bureau takes no position on the merits of the underlying case, 
proceeding, or order, or any related arguments, including any arguments 
regarding sovereign immunity or Tribal status. As discussed in the 
section-by-section discussion of Sec. Sec.  1092.202(g) and 1092.204(f) 
below, the Bureau believes that the voluntary good-faith filing option 
provides a satisfactory mechanism for tribally affiliated entities to 
avoid the risk of an enforcement action where they decide not to 
register an order or submit a written statement based on a good-faith 
belief that they are not a covered nonbank or a supervised registered 
entity, such as on the grounds that they qualify as part of a federally 
recognized tribe and thus as a ``State,'' or that an order is not a 
covered order. Also as discussed in those sections, an entity may 
choose whether or not it wishes to submit such a filing, and the Bureau 
will treat such filings as ``administrative information'' that it will 
not publish under Sec.  1092.205(a). Thus, the Bureau does not agree 
that application of the rule to tribally affiliated entities would 
expose Tribal treasuries to unfounded attacks.
    The Bureau declines to finalize an exemption for CUSOs in Sec.  
1092.201(d)'s definition of ``covered nonbank.'' \211\ Unlike insured 
credit unions, which are exempt from the definition, CUSOs are not 
directly subject to the NCUA's full examination and enforcement 
authority, and are not chartered or insured by the NCUA.\212\ And while 
presently the NCUA requires a federally insured credit union investing 
in or lending to a CUSO to obtain a written agreement requiring the 
applicable CUSO to ``provide the NCUA with complete access to its books 
and records and the ability to review the CUSO's internal controls'' 
and to supply the NCUA with ``operational and financial information'' 
via a CUSO Registry,\213\ the NCUA nevertheless has previously 
emphasized in Congressional testimony that ``this does not provide 
access to examine all of the CUSO's operations.'' \214\ The Bureau 
concludes that requiring covered nonbanks that are CUSOs to register 
will provide valuable information to the Bureau and others regarding 
risks such covered nonbanks may present to consumers. Among other 
things, if--as the Bureau intends--the Bureau publishes registry 
information, requiring CUSOs that qualify as covered nonbanks to 
register with the nonbank registry will facilitate credit union due 
diligence in using a CUSO to provide services to the credit union in 
connection with the offering or provision of consumer financial 
products and services.
---------------------------------------------------------------------------

    \211\ Like other covered nonbanks, a CUSO would only be subject 
to the rule if it qualified as a ``covered nonbank'' under the 
criteria established in Sec.  1092.201(d), including the requirement 
that the CUSO satisfy the CFPA definition of the term ``covered 
person.'' And a CUSO would only be subject to Sec.  1092.204's 
written-statement requirements if it qualified as a ``supervised 
registered entity'' under the criteria established in Sec.  
1092.201(q). Under Sec.  1092.201(q)(1), a CUSO that is subject to 
Bureau examination and supervision solely in its capacity as a 
service provider and that is not otherwise subject to Bureau 
supervision and examination will not be deemed to be a ``supervised 
registered entity'' under Sec.  1092.201(q).
    As discussed above, entities that are service providers may 
nevertheless also be covered persons under the CFPA. For example, a 
CUSO, such as a CUSO wholly owned by a credit union, that acts as a 
service provider under the CFPA to its covered person credit union 
affiliate would itself be deemed to be a covered person as provided 
in 12 U.S.C. 5481(6)(B), and thus would qualify as a ``covered 
nonbank'' under Sec.  1092.201(d) if the other criteria of that 
definition are satisfied.
    \212\ See NCUA Office of Inspector General, Report #OIG-20-07, 
``Audit of the NCUA's Examination and Oversight Authority Over 
Credit Union Service Organizations and Vendors'' 4 (Sept. 1, 2020), 
https://ncua.gov/files/audit-reports/oig-audit-cusos-vendors-2020.pdf (OIG Report) (``CUSOs are not directly subject to NCUA 
regulation or examination and are not chartered or insured by the 
NCUA.'').
    \213\ OIG Report at 6-8; see also 12 CFR 712.3; CUSO Registry, 
https://ncua.gov/regulation-supervision/regulatory-reporting/cuso-registry.
    \214\ OIG Report at 16 (describing NCUA testimony seeking 
additional statutory authority from Congress).
---------------------------------------------------------------------------

    The Bureau also notes that the credit union exemption provided 
under Sec.  1092.201(d)(1) applies only to insured credit unions, as 
that term is defined by Sec.  1092.101(a), which in turn defines the 
term ``insured credit union'' to have the meaning given to that term in 
the CFPA.\215\ Thus, this exemption does not apply to credit unions, 
such as certain uninsured or privately insured credit unions, that do 
not meet the definition of ``insured credit union'' under the CFPA and 
the final rule. Such credit unions must comply with the rule's

[[Page 56063]]

registration and other provisions with respect to covered nonbanks and 
supervised registered entities where they would otherwise be 
applicable.\216\
---------------------------------------------------------------------------

    \215\ See 12 U.S.C. 5481(17).
    \216\ Likewise, the exemption at Sec.  1092.201(d)(1) would not 
apply to any bank or savings association that is not an ``insured 
depository institution'' or ``insured credit union'' as defined in 
the final rule. See Sec.  1092.101(a), 201(h) of the final rule.
---------------------------------------------------------------------------

    The Bureau declines to adopt an express exemption from the 
definition of ``covered nonbank'' for institutions supervised by the 
Farm Credit Administration. The industry commenter that requested such 
an exemption has not shown that it is necessary or appropriate.\217\ 
The commenter discusses one category of orders that institutions 
regulated by the Farm Credit Administration might register under the 
rule--namely, orders from the Farm Credit Administration enforcing 
compliance with certain Federal consumer financial laws. Under current 
Farm Credit Administration policy, however, the agency does not 
``identify the institution and/or persons involved'' when it issues an 
order enforcing the law against an institution it regulates.\218\ An 
order that does not publicly ``[i]dentif[y] a covered nonbank by name 
as a party subject to the order'' would not qualify as a ``covered 
order'' required to be registered under the final rule.\219\ Moreover, 
in the event a person regulated by the Farm Credit Administration has 
concerns that it may be deemed a covered nonbank or that any particular 
order may be deemed a covered order notwithstanding its good-faith 
belief to the contrary, it may file one or more good-faith 
notifications under Sec.  1092.202(g) or Sec.  1092.204(f), as 
applicable.
---------------------------------------------------------------------------

    \217\ The industry commenter states that institutions regulated 
by the Farm Credit Administration do not fall within other 
exclusions from the definition of ``covered nonbank'' in Sec.  
1092.202(d), such as the exclusion for a ``person that qualifies as 
a covered person based solely on conduct that is the subject of, and 
that is not otherwise exempted from, an exclusion from the Bureau's 
rulemaking authority under 12 U.S.C. 5517.'' Cf. 12 U.S.C. 5517(k) 
(providing that the Bureau ``shall have no authority to exercise any 
power to enforce this title with respect to a person regulated by 
the Farm Credit Administration,'' but not referring to the Bureau's 
rulemaking authority (emphasis added)).
    \218\ Farm Credit Administration, Policy Statement: Disclosure 
of the Issuance and Termination of Enforcement Documents (effective 
Jan. 27, 2005), https://ww3.fca.gov/readingrm/Handbook/_layouts/15/WopiFrame.aspx?sourcedoc={920F0A1E-1839-493C-BE19-
E13751EA460D{time} &file=Disclosure%20of%20the%20Issuance%20and%20Ter
mination%20of%20Enforcement%20Documents.docx&action=default.
    \219\ See Sec.  1092.201(e)(1)(i) of the final rule.
---------------------------------------------------------------------------

    The Bureau also does not choose to finalize an express exemption 
for attorneys or law firms in the final rule. Individual attorneys 
already fall outside the definition of covered nonbank under the Sec.  
1092.201(d)(4) exclusion for natural persons. Where a law firm 
satisfies the final rule's definition of the term ``covered nonbank,'' 
the Bureau concludes that entry of a covered order against such a 
covered nonbank is likely to be probative of risk to consumers, and 
that it is appropriate to require registration under such 
circumstances, consistent with the Bureau's statutory jurisdiction and 
authority. In addition, the final rule does not require the submission 
of any information to the nonbank registry that is protected by the 
attorney-client privilege or any other legal privilege. As stated in 
part III(B), the Bureau's registry is designed to not collect any 
protected proprietary, personal, or confidential consumer information, 
and thus, the Bureau will not publish, or require public reporting of, 
any such information. Further discussion of the publication provisions 
of the final rule is provided in the section-by-section discussion of 
Sec.  1092.205 below.
    With respect to commenters' requests for exemptions for mortgage 
lenders and servicers, the Bureau is finalizing a one-time registration 
option for NMLS-published covered orders at Sec.  1092.203; this 
provision is discussed in more detail in part IV(E) and the section-by-
section discussion of Sec.  1092.203 below. Under the final rule, with 
respect to any NMLS-published covered order, a covered nonbank that is 
identified by name as a party subject to the order may elect to comply 
with the one-time registration option described in Sec.  1092.203 in 
lieu of complying with the requirements of Sec. Sec.  1092.202 and 
1092.204. The Bureau is adopting this provision in part to address the 
concerns of commenters that requiring mortgage lenders and servicers to 
register orders that are already available on the public NMLS Consumer 
Access website would be duplicative and burdensome.
    The Bureau declines to finalize an additional express exemption 
from Sec.  1092.202(d) for covered nonbanks that are mortgage lenders 
or mortgage servicers. The CFPA expressly subjects these entities to 
the Bureau's supervisory authority,\220\ and the legislative history of 
the CFPA indicates that Congress viewed this authority as integral to 
the Bureau's mandate.\221\ In addition, the Bureau is the only Federal 
regulator with supervisory and enforcement jurisdiction over all of 
these entities, which are chartered by the various States. The option 
provided at Sec.  1092.203 will help eliminate redundant filings by 
nonbank mortgage lenders and mortgage servicers while notifying the 
nonbank registry when an applicable order has been issued or obtained 
against a covered nonbank. Thus, the Bureau believes that requiring 
such entities to register covered orders, subject to the one-time 
registration option described in Sec.  1092.203 for NMLS-published 
covered orders where it applies, would serve the purposes of the final 
rule described in part IV above.
---------------------------------------------------------------------------

    \220\ See 12 U.S.C. 5514(a)(1).
    \221\ See, e.g., S. Rep. No. 111-176 at 11-14 (2010) (discussing 
the ``mortgage crisis'' that began in the 2000s), 167 
(``Specifically, the Bureau will have the authority to supervise all 
participants in the consumer mortgage arena, including mortgage 
originators, brokers, and servicers and consumer mortgage 
modification and foreclosure relief services. These entities 
contributed to the housing crisis that led to the near collapse of 
the financial system.''), 229 (``The CFPB would have been able to 
head off the subprime mortgage crisis that directly led to the 
financial crisis, because the CFPB would have been able to see and 
take action against the proliferation of poorly underwritten 
mortgages with abusive terms.''). As discussed in part II(A) above, 
the Bureau was created in the wake of the 2008 financial crisis, 
which was caused by a variety of overlapping factors including 
systemic malfeasance in the mortgage industry.
---------------------------------------------------------------------------

Final Rule
    For the reasons set forth above and as follows, the Bureau is 
finalizing Sec.  1092.201(d) as proposed, with revisions to clarify the 
treatment of ``related persons.'' The final rule renumbers the items in 
Sec.  1092.201(d) accordingly.
    The Bureau had proposed to exclude ``related persons,'' as that 
term is defined at Sec.  1092.101(a) and CFPA section 1002(25), from 
the proposed definition of ``covered nonbank.'' \222\ Final Sec.  
1091.201(d)(1) and (2) have been revised to retain this exclusion, but 
to clarify these provisions to provide that the final rule does not 
include within the definition of ``covered nonbank'' a person who is a 
covered person solely by virtue of being a related person as defined in 
CFPA section 1002(25). Under CFPA section 1002(25), certain persons are 
``deemed to [be] a covered person for all purposes of any provision of 
Federal consumer financial law[.]'' \223\ However, CFPA section 
1022(c)(7)(A) excludes related persons from the type of covered persons 
covered by Bureau rules regarding registration issued under CFPA 
section 1022(c)(7) authority.\224\ As discussed at parts III and IV 
above, the Bureau is issuing this rule under separate authorities under 
CFPA sections 1022 and 1024. However, for clarity, the final rule will 
not cover persons who are not subject to the

[[Page 56064]]

Bureau's CFPA section 1022(c)(7)(A) authority. Therefore, the final 
rule excludes related persons from the definition of ``covered 
nonbank,'' to the extent that they are not covered persons for any 
other reason than being deemed covered persons pursuant to CFPA section 
1002(25). For example, this exclusion generally would not apply to a 
nonbank entity that qualifies as a covered person because it offers or 
provides a consumer financial product or service,\225\ even if that 
entity also happens to be a related person.
---------------------------------------------------------------------------

    \222\ 88 FR 6088 at 6108.
    \223\ 12 U.S.C. 5481(25)(B).
    \224\ 12 U.S.C. 5512(c)(7)(A).
    \225\ See 12 U.S.C. 5481(6)(A).
---------------------------------------------------------------------------

Section 1092.201(e) Covered Order
Proposed Rule
    The Bureau proposed Sec.  1092.201(e) to define the term ``covered 
order.'' The proposal would have defined the term to include only 
orders that are both public and final. The term ``public'' was defined 
at proposed Sec.  1092.201(k). The proposed term ``covered order'' was 
intended to cover only final settlement or consent orders, or final 
agency or court orders resulting from litigation or adjudicated agency 
proceedings. By ``final'' order, the proposal meant to exclude such 
orders as preliminary injunctions, temporary restraining orders, orders 
partially granting and partially denying motions to dismiss or summary-
judgment motions, and other interlocutory orders.\226\ The proposed 
term would also have excluded temporary cease-and-desist orders that 
come into effect pending the resolution of an underlying contested 
matter but would have included a related final cease-and-desist or 
other order resolving the matter. The proposed term would have also 
excluded notices of charges, accusations, or complaints that are part 
of disciplinary or enforcement proceedings but do not constitute a 
final order. The Bureau proposed to include orders that are final by 
their own terms or under applicable law, even where Federal, State, or 
local law allows for the appeal of such orders. Proposed Sec.  
1092.201(f), defining the term ``effective date,'' would have addressed 
situations where an order is subject to a stay following issuance. The 
Bureau sought comment on whether the term ``final'' should be further 
defined in the regulatory text.
---------------------------------------------------------------------------

    \226\ See, e.g., Gelboim v. Bank of Am. Corp., 574 U.S. 405, 
408-09 (2015) (discussing the meaning of ``final decision'' under 28 
U.S.C. 1291).
---------------------------------------------------------------------------

    The proposed definition included orders issued by either an agency 
or a court. The proposal would have clarified that the definition would 
include an otherwise covered order whether or not issued upon consent. 
Accordingly, under the proposal, ``covered orders'' could have been 
issued upon consent or settlement. They could also have been issued 
after the filing of a lawsuit or complaint and a process of litigation 
or adjudication. The proposed term would not have included corporate 
resolutions adopted by an entity and not issued by an agency or court. 
Nor would the proposed term have generally included licenses, including 
conditional licenses; but the term would have included an order 
suspending, conditioning, or revoking a license based on a violation of 
law. Nor would the proposed term have included related stipulations or 
consents, where those documents are not incorporated into or otherwise 
made part of the order.
    Proposed Sec.  1092.201(e)(1) would also have included, as a 
component of the definition of the term ``covered order'' for a given 
covered nonbank, a requirement that the order identify the covered 
nonbank by name as a party subject to the order. Thus, for example, 
orders that indirectly refer to a covered nonbank as an ``affiliate'' 
of a named party, but do not name the covered nonbank as itself a party 
subject to the order, would not have been covered orders under proposed 
Sec.  1092.201(e) with respect to the covered nonbank. Nor would orders 
that apply to a covered nonbank only as a ``successor and assign'' of a 
named party, where the order does not expressly identify the covered 
nonbank by name as a party subject to the order. The proposal would 
have included in the definition a covered nonbank that is listed by 
name as a party somewhere within the body of the order, even if the 
covered nonbank is not listed in the order's title or caption. In other 
words, to fall within the proposed Sec.  1092.201(e) definition, it 
would have been sufficient that the order identifies the covered 
nonbank by name as a party subject to the order even if the covered 
nonbank is not listed in the title or caption of the order, or as the 
primary respondent, defendant, or subject of the order. A covered 
nonbank may have satisfied the proposed definition even if the issuing 
agency or court did not list the covered nonbank as a party in related 
press releases or internet links.
    Proposed Sec.  1092.201(e)(2) would have included, as a component 
of the definition of the term ``covered order,'' a requirement that the 
order have been issued at least in part in any action or proceeding 
brought by any Federal agency, State agency, or local agency. The 
Bureau believed that limiting the registration requirement to orders 
involving such agencies would provide sufficient information to support 
Bureau functions. This proposed requirement would have included orders 
issued by the Bureau itself, the ``prudential regulators,'' as that 
term is defined at CFPA section 1002(24),\227\ and any ``Executive 
agency,'' as that term is defined at 5 U.S.C. 105. The proposed 
requirement would have also included orders issued by ``State 
agencies'' as defined at proposed Sec.  1092.201(n) and ``local 
agencies'' as defined at proposed Sec.  1092.201(i). An order issued by 
a local agency would have satisfied this proposed requirement, but such 
an order would not have satisfied the requirement set forth in proposed 
Sec.  1092.201(e)(4) (described below) unless the order imposed the 
obligations described in proposed Sec.  1092.201(e)(3) on the covered 
nonbank based on one or more violations of a covered law. While certain 
Federal and State laws were included in the Sec.  1092.201(c) 
definition of the term covered law, local laws were not.
---------------------------------------------------------------------------

    \227\ 12 U.S.C. 5481(24).
---------------------------------------------------------------------------

    Proposed Sec.  1092.201(e)(3) further would have included, as a 
component of the definition of the term ``covered order,'' a 
requirement that the order contain public provisions that impose 
obligations on the covered nonbank to take certain actions or to 
refrain from taking certain actions. Such obligations may have 
included, for example, injunctions or other obligations to cease and 
desist from violations of the law; to pay civil money penalties, 
refunds, restitution, disgorgement, or other money; to amend certain 
policies and procedures, including but not limited to instances where 
the order requires submission of the proposed amendments to policies 
and procedures for nonobjection; to maintain records or to provide them 
upon request; or to take or to refrain from taking other actions. An 
order suspending, conditioning, or revoking a license based on a 
violation of law would have met this requirement. An order that lacks 
any public provision imposing such an obligation on the covered nonbank 
would not have met the requirement in proposed Sec.  1092.201(e)(3). 
The Bureau explained that an example of the type of orders that might 
not have satisfied this requirement would be a declaratory judgment 
order finding that an entity has violated the law, but not imposing any 
remedial obligations. Other examples, the Bureau explained, might 
include orders whose only public provisions are releases and general 
contractual terms frequently contained in consent orders, such as 
severability and counterpart signature provisions, but only to the 
extent these provisions

[[Page 56065]]

do not impose any other obligations described by proposed Sec.  
1092.201(e)(3).
    The proposed Sec.  1092.201(e)(3) requirement would have excluded 
order provisions that are not ``public'' as that term was defined in 
proposed Sec.  1092.201(k). For example, obligations imposed by non-
public provisions that constitute confidential supervisory information 
of another agency would not have been considered when determining 
whether a particular order satisfies this proposed requirement. 
Proposed Sec.  1092.201(e)(3) would have also excluded orders that lack 
any public provision imposing an obligation on the covered nonbank to 
take certain actions or to refrain from taking certain actions. The 
Bureau explained that, for example, an order that describes unlawful 
conduct but does not contain any such public provisions imposing 
obligations described at proposed Sec.  1092.201(e)(3) would not have 
satisfied this requirement. The Bureau proposed to exclude from the 
rule's information-collection requirements nonpublic orders and 
portions of orders in order to help protect the confidential processes 
of other agencies, including their supervisory processes. The Bureau 
was concerned that requiring registration of confidential supervisory 
information might have interfered with the functions and missions of 
other agencies and did not believe that requiring such registration was 
necessary to accomplish the purposes of the proposed rule. The Bureau 
noted that, to the extent that it has a need to review nonpublic orders 
or nonpublic portions of orders, the Bureau may seek access to relevant 
information through inter-agency information sharing that protects 
applicable privileges and confidentiality. In addition, as discussed in 
the section-by-section discussion of Sec.  1092.201(m) below, the 
Bureau believed that publication of nonpublic information, including 
but not limited to confidential supervisory information of the Bureau 
or other agencies, would be inappropriate.
    Proposed Sec.  1092.201(e)(4) would have also included, as a 
component of the definition of the term covered order, a requirement 
that the order impose one or more of the obligations described in 
proposed Sec.  1092.201(e)(3) on the covered nonbank based on an 
alleged violation of a covered law. The Bureau explained that, under 
the proposal, a covered order need not have included an admission of 
liability or any particular factual predicate. The Bureau anticipated 
that agency and court orders would vary widely in form and content, 
depending in part on such matters as the relevant individual laws being 
enforced, the historical practices of the various enforcement agencies, 
and the negotiations and facts and circumstances underlying specific 
orders. Because of these expected variations in form and content in the 
orders that the Bureau expected to be registered under the proposal, 
the Bureau believed that requiring registration only of orders that 
contain an admission of liability, or a statement setting forth certain 
types of findings or other factual predicates underlying the order, 
would omit relevant orders. The Bureau believed that an order that 
contains neither an admission of liability nor a statement setting 
forth the factual predicate underlying the order may nevertheless be 
probative of risks to consumers of the type that the Bureau is 
obligated to monitor.
    The Bureau explained that, for purposes of this proposed 
definition, an obligation would have been ``based on'' an alleged 
violation where the order identifies the covered law in question, 
asserts or otherwise indicates that the covered nonbank has violated 
it, and imposes the obligation on the covered nonbank at least in part 
as a result of the alleged violation.\228\ This would have included, 
for example, obligations imposed as ``fencing-in'' or injunctive 
relief, so long as those obligations were imposed at least in part as a 
result of the entity's violation of a covered law. This element of the 
proposed definition would also have been satisfied, for example, by any 
obligation imposed as part of other legal or equitable relief granted 
with respect to the violation, as well as by any obligation imposed in 
order to prevent, remedy, or otherwise address a violation of a covered 
law, or the conditions resulting from the violation. The Bureau noted, 
however, that an order that does not identify a covered law as at least 
one of the legal bases for the obligations it imposes on a covered bank 
would not satisfy the requirement set forth at proposed Sec.  
1092.201(e)(4). The Bureau explained that an order may identify a 
covered law as a legal basis for the obligations imposed by referencing 
another document, such as a written opinion, stipulation, or complaint, 
that shows that a covered law served as the legal basis for the 
obligations imposed in the order. The Bureau, however, stated that the 
requirements of proposed Sec.  1092.201(e)(4) would not have been 
satisfied where the legal basis for the obligations imposed is 
specified only in extrinsic documents not referenced in the order at 
issue, such as a press release or blog post.
---------------------------------------------------------------------------

    \228\ The Bureau explained that an obligation imposed based on 
multiple violations, some of covered laws and some of other laws, 
would qualify as an ``obligation[ ] . . . based on an alleged 
violation of a covered law'' within the meaning of proposed Sec.  
1092.201(e)(4), even if the violations of the non-covered laws would 
themselves have sufficed to warrant the imposition of the 
obligation.
---------------------------------------------------------------------------

    The Bureau explained that the proposed Sec.  1092.201(e)(4) 
requirement would have included an order issued by an agency exercising 
any powers conferred on such agency by applicable law to enforce a 
covered law, so long as the order imposes one or more of the 
obligations described in proposed Sec.  1092.201(e)(4) on the covered 
nonbank based on an alleged violation of a covered law. For example, 
the Bureau noted, certain Federal agencies may issue an order 
predicated on violation of a Federal consumer financial law under the 
authority of another enabling enforcement or licensing statute. Among 
other examples, an appropriate Federal banking agency may issue orders 
in connection with certain violations of Federal consumer financial law 
under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), 
the Administrator of the National Credit Union Administration may issue 
such orders under the Federal Credit Union Act (12 U.S.C. 1751 et 
seq.), and the Securities and Exchange Commission may issue such orders 
under the Federal securities laws. The Bureau noted that such an order 
issued in connection with violations of Federal consumer financial law 
would satisfy the requirement set forth in proposed Sec.  
1092.201(e)(4) in cases where the order imposes the obligations 
described in proposed Sec.  1092.201(e)(3) on the covered nonbank based 
on one or more violations of Federal consumer financial law (or another 
covered law).
    The Bureau noted that other agencies also may rely upon their 
enforcement authorities under other laws in issuing orders in 
connection with violations of FTC Act section 5 (and rules and orders 
issued thereunder). For example, an appropriate Federal banking agency 
may issue orders in connection with violations of FTC Act section 5 by 
relying on its enforcement authorities under section 8 of the Federal 
Deposit Insurance Act (12 U.S.C. 1818). The Bureau explained that such 
an appropriate Federal banking agency order would have satisfied the 
requirement set forth in proposed Sec.  1092.201(e)(4) in cases where 
the order imposed the obligations described in proposed Sec.  
1092.201(e)(3) on the covered nonbank based on one or more violations 
of the prohibition on unfair or deceptive acts or practices under FTC 
Act section 5 (or a rule or order issued for the purpose of 
implementing that

[[Page 56066]]

prohibition) or another covered law. The order, the Bureau explained, 
would satisfy the requirement provided in proposed Sec.  1092.201(e)(4) 
even though the FTC Act does not expressly authorize the Federal 
banking agencies to enforce FTC Act section 5.
    Similarly, the Bureau considered an obligation to be ``based on'' 
an alleged violation of a covered law where: (i) a State agency issues 
an order pursuant to certain State statutes that treat violations of 
Federal or State laws as violations of the State statute; \229\ and 
(ii) the order (or, as discussed above, an extrinsic document 
referenced in the order) states that one or more violations of a 
covered law (e.g., a Federal consumer financial law) served as the 
legal basis for imposing the obligations under such statute. In such 
cases, while the majority of these State laws would not themselves have 
qualified as covered laws under proposed subpart B--and therefore were 
not captured in appendix A--the underlying law violation would have so 
qualified. The Bureau believed including such instances was important, 
as it understood that State agencies sometimes issue orders in 
connection with violations of Federal consumer financial law relying on 
their authorities under these State licensing and other statutes that 
do not themselves satisfy the definition of covered law. Importantly, 
however, such an order would not have met the proposed definition of 
``covered order'' unless the order itself (or, as discussed above, an 
extrinsic document referenced in the order) stated that a covered law 
served as the legal basis for the obligations imposed in the order. A 
State order that relied upon such a statute, but that did not identify 
a covered law as the legal basis for the obligations imposed 
thereunder, would not have satisfied the requirement set forth in 
proposed Sec.  1092.201(e)(4).\230\ Nor would an order that imposed 
obligations solely based on violations of other laws, even laws that 
are analogous to covered laws but do not themselves qualify as covered 
laws under proposed subpart B. Section 1092.201(e)(4), the Bureau 
explained, was intended to capture only orders that impose obligations 
based upon an agency's or court's determination that the applicable 
covered nonbank has actually violated the covered law itself.
---------------------------------------------------------------------------

    \229\ See, e.g., Wash. Rev. Code sec. 19.146.0201(11).
    \230\ The Bureau explained that the obligations imposed in an 
order issued or obtained by a State agency under a State law that 
incorporates Federal law may be ``based on'' an alleged violation of 
Federal consumer financial law under proposed Sec.  1092.201(e)(4), 
even if the Federal consumer financial law itself does not expressly 
authorize that State agency to enforce it. The Bureau noted that, so 
long as the State agency states that the relevant order provisions 
are based on one or more violations of the Federal consumer 
financial law, it would be a covered order under the proposed 
definition.
---------------------------------------------------------------------------

    Under proposed Sec.  1092.201(e)(5), the proposal would also have 
defined ``covered order'' to mean an order that has an effective date 
on or later than January 1, 2017. The Bureau believed that limiting the 
registration requirement to orders with more recent effective dates 
would provide sufficient information to support Bureau functions. The 
Bureau explained that many orders issued by Federal, State, and local 
agencies do not have expiration dates or do not expire until after the 
passage of many years. While the Bureau believed that many earlier-in-
time orders remain highly probative of ongoing risks to consumers and 
could assist the Bureau in carrying out its market-monitoring 
obligations--as well as assist the Bureau in assembling an effective 
nonbank registry--the Bureau preliminarily concluded that 
considerations of administrative efficiency favored focusing on orders 
issued within approximately the first several years preceding any final 
rule. The Bureau sought comment on this proposed approach.
    Finally, proposed Sec.  1092.201(e) would have provided that the 
term ``covered order'' would not include an order issued to a motor 
vehicle dealer that is predominantly engaged in the sale and servicing 
of motor vehicles, the leasing and servicing of motor vehicles, or 
both, within the meaning of CFPA section 1029(a),\231\ except to the 
extent such order is in connection with the functions that are excepted 
from the application of CFPA section 1029(a) as described in CFPA 
section 1029(b).\232\ This provision would have excluded certain orders 
issued to motor vehicle dealers that are described in CFPA section 
1029(a), and would have incorporated the definitions provided at CFPA 
section 1029(f).\233\ CFPA section 1029(a) establishes a statutory 
exclusion from the Bureau's authority; CFPA section 1029(b) excepts 
certain functions of motor vehicle dealers from that exclusion.\234\ 
The Bureau noted, therefore, that an order that is issued to a motor 
vehicle dealer that relates to the functions described in section 
1029(a)--that is, the sale and servicing of motor vehicles, the leasing 
and servicing of motor vehicles, or both--generally would not have been 
a ``covered order'' under the proposed definition. However, if the 
order related at least in part to a function excepted from the 
application of CFPA section 1029(a) as described in CFPA section 
1029(b), this limitation would not apply, and the order would have 
qualified as a ``covered order.'' The functions described in 1029(b) 
include: ``provid[ing] consumers with any services related to 
residential or commercial mortgages or self-financing transactions 
involving real property;'' ``operat[ing] a line of business--(A) that 
involves the extension of retail credit or retail leases involving 
motor vehicles; and (B) in which--(i) the extension of retail credit or 
retail leases are provided directly to consumers; and (ii) the contract 
governing such extension of retail credit or retail leases is not 
routinely assigned to an unaffiliated third party finance or leasing 
source;'' and ``offer[ing] or provid[ing] a consumer financial product 
or service not involving or related to the sale, financing, leasing, 
rental, repair, refurbishment, maintenance, or other servicing of motor 
vehicles, motor vehicle parts, or any related or ancillary product or 
service.'' \235\
---------------------------------------------------------------------------

    \231\ 12 U.S.C. 5519(a).
    \232\ 12 U.S.C. 5519(b).
    \233\ 12 U.S.C. 5519(f).
    \234\ 12 U.S.C. 5519(a), (b).
    \235\ 12 U.S.C. 5519(b).
---------------------------------------------------------------------------

Comments Received
    The Bureau specifically sought comment on whether certain types of 
orders should be categorically excluded from registration.\236\ 
Commenters stated that the registry should not collect or publish 
information regarding consent orders. Commenters stated that including 
consent orders would unfairly include orders that do not involve any 
adjudication of wrongdoing; that such orders often are based on errors 
or inaccurate or contested allegations, or result from a change in a 
regulator's interpretation of the law; and that such orders often 
contain provisions clearly stating that the entity does not concede or 
admit liability. Commenters also stated that companies often only 
settle matters in order not to incur the cost, delay, and uncertainty 
of litigation, that consent orders often involve matters that might not 
have been determined to be violations if fully litigated, and that 
regulators are often uncertain about whether they can prove the 
violations alleged. Industry commenters stated that consent orders 
represent only a crude predictor of risk, and including them would 
provide an inaccurate, inconsistent, or misleading picture of risk to 
consumers. Industry commenters stated that including consent orders

[[Page 56067]]

would penalize companies that have agreed to settle matters instead of 
litigating them, and that including consent orders would be unfair 
because it would lead to registering only those businesses who are not 
able to afford defending themselves from government attacks.
---------------------------------------------------------------------------

    \236\ See 88 FR 6088 at 6110.
---------------------------------------------------------------------------

    Commenters, including the SBA Office of Advocacy, specifically 
objected to the Bureau's publication of consent orders, stating that 
such publication would be unfair because it would have negative 
reputational consequences and lead to a decrease of business; would 
prejudice the entities involved; would otherwise provide inaccurate 
information to the Bureau and to consumers; would lead to higher 
compliance costs; would likely encourage class action lawsuits and 
spurious litigation claims; and could result in unintended 
consequences.
    Commenters stated that, in particular, publication of consent 
orders would deter covered nonbanks from consenting to covered orders 
in future. Commenters stated that the deleterious effects of being 
identified on the registry would have a chilling effect on consents and 
would discourage settlement in future proceedings, including those 
brought by agencies other than the Bureau, and would induce covered 
nonbanks to litigate enforcement or civil actions instead of settling. 
Thus, commenters argued, the registry would prolong litigation, raise 
costs, and worsen outcomes, and could be disruptive to the State and 
local oversight process, in particular as regulators might become less 
likely to bring enforcement actions. Commenters stated that these 
effects would be especially pronounced for smaller settlements. The 
joint letter from State regulators stated the imposition of the 
proposed written-statement requirements, in particular, could frustrate 
a State regulator's ability to effectively resolve supervisory matters 
or to finalize enforcement matters. An industry commenter stated that 
the proposed registry would create a disincentive for entities to self-
report violations, for fear of becoming subject to the proposed rule's 
registration requirements. Commenters stated that because of these 
effects, the registry would lead to additional harm to consumers. But a 
consumer advocate commenter stated that the argument that the registry 
will deter entities from being cooperative or forthcoming is an 
inappropriate threat not to cooperate that should not be rewarded with 
lax oversight.
    Industry commenters stated that the proposed registry would be 
unfair because other companies are likely engaging in conduct similar 
to the conduct that resulted in a covered order but are not getting 
caught.
    An industry commenter objected to the Bureau's proposal to register 
orders issued or obtained by the Bureau itself, stating that an 
additional registry of such orders would be superfluous.
    Commenters objected to the Bureau's proposal to register orders 
issued by State agencies and local agencies, and by State courts, and 
to impose written-statement requirements in connection with such 
orders. Commenters stated that the Bureau lacks authority, expertise, 
and knowledge of relevant circumstances applicable to such orders, and 
has no legitimate interest in them. An industry commenter indicated 
that the proposal would give the Bureau enforcement power over other 
agencies' orders for violations of State and Federal laws that the 
Bureau has no jurisdiction to enforce. A Tribal commenter stated that 
including such orders in a public database would interfere with the 
other government's sovereign decision regarding whether and how to 
publish its own orders. An industry commenter stated that orders issued 
by local agencies should not be included because local regulatory and 
enforcement agencies may be subject to more local, provincial issues, 
local control, and local political trends, and be less likely to 
produce orders that are based on broader consumer financial protection 
issues.
    A Tribal commenter stated that the definition of ``covered order'' 
should be amended to require that the order be ``enforceable'' in 
addition to final and public. The Tribal commenter also stated that the 
rule should clarify when an order is issued ``at least in part'' in an 
action or proceeding brought by an applicable agency.
    An industry commenter stated that it was unclear under the proposed 
definition whether nonpublic NCUA letters of recommendation would be 
covered.
    An industry commenter stated the Bureau should further clarify the 
definition of ``covered order'' because State agencies vary in their 
approaches to enforcing and interpreting orders. The commenter stated 
that one State agency may consider a final order that involves a 
corrected issue to be closed, while another State may not.
    The Bureau specifically sought comment on the scope of proposed 
Sec.  1092.201(e)(1), which included a requirement that the covered 
order identify a covered nonbank by name as a party subject to the 
order, and whether proposed Sec.  1092.201(e)(1) should also include 
affiliates, successors and assigns, or other methods of identifying 
entities subject to orders, even though they are not expressly named in 
the order. A consumer advocate commenter stated that the rule should 
apply to successors and assigns, not just named parties as provided 
under proposed Sec.  1092.201(e)(1).
    Commenters stated generally that the proposed registry was 
overbroad and too prescriptive. Industry commenters suggested that the 
Bureau attempt to limit those covered orders that require registration 
to orders that involve more serious or direct consumer harm, as opposed 
to those that involve only clerical or administrative errors, or that 
do not meet a minimum threshold of harm to consumers. Commenters stated 
that the proposed registry should not lump small orders together with 
large important orders. Commenters stated that the proposal's approach 
would result in overreporting of minor infractions that would confuse 
or mislead the public, overwhelm the nonbank registry, or render the 
nonbank registry less useful, and would improperly impose reputational 
harm.
    Under proposed Sec.  1092.201(e)(5), the proposal would have 
defined ``covered order'' to mean an order that has an effective date 
on or later than January 1, 2017. A consumer advocate commenter stated 
that the term ``covered order'' should include all orders for 10 years 
prior to the effective date of the final rule. The commenter stated 
that this change would correspond with proposed Sec.  1092.202(e), 
which would have provided that a covered order shall cease to be a 
covered order for purposes of this subpart as of the later of: (1) ten 
years after its effective date; or (2) if the covered order expressly 
provides for a termination date more than ten years after its effective 
date, the expressly provided termination date.
    An industry commenter stated that the 2017 date should be moved 
forward to 2019 or later to better distinguish nonbanks with only a few 
consent orders, or that have taken appropriate remedial steps related 
to the order, from actors with a clear record of consistent consumer or 
other abuse.
    Industry commenters stated that the nonbank registry should not 
apply to prior orders at all, but only to orders issued after the 
effective date of the rule. An industry commenter stated that the 
proposal would violate the right to due process, as entities would not 
have agreed to consent to covered orders if they had been aware of the 
Bureau's registry. Another commenter stated that the proposal's 
registration of existing orders contravened legal tradition barring ex 
post facto laws.

[[Page 56068]]

    Tribal and industry commenters stated that orders should not be 
considered ``final'' as provided under proposed Sec.  1092.201(e) until 
all avenues of appeal have been exhausted.
    A joint letter by State regulators stated that the proposal 
introduced other complexities and confusion for covered entities and 
consumers due to ambiguities relating to the rule's registration 
requirement, and that these ambiguities could not be satisfactorily 
addressed because most covered orders will not be issued by the Bureau. 
In particular, the joint comment letter questioned how the same or 
similar violations across different business lines would be treated, 
and how the registration requirements would apply if multiple States 
take unilateral action for a firm's violation of the same consumer 
financial law. The comment expressed concern that nonbanks would be 
unable to understand or comply with the obligations of the rule due to 
questions about if, when, and how a nonbank might be required to report 
an order to the Bureau.
    An industry commenter stated that the Bureau should clarify that an 
affiliate of a covered person need not register with respect to a 
covered order unless it is itself named in the covered order.
    The Bureau received a question in interagency consultation 
regarding whether ``assurances of voluntary compliance'' would be 
covered orders.
Response to Comments Received
    The Bureau is finalizing the definition of ``covered order'' to 
include an otherwise covered order whether or not issued upon consent. 
Accordingly, ``covered orders'' may be issued upon consent or 
settlement. The Bureau is adopting this approach for several reasons. 
First, under Sec.  1092.201(e)(1)(iv), the final rule will only apply 
to orders in which an agency or court has imposed applicable 
obligations on the covered nonbank based on an alleged violation of a 
covered law. Where a court or agency makes a decision to issue an order 
based on one or more violations of a covered law, such an order is 
clearly relevant to and probative of risk to consumers (including risks 
related to developments in markets for consumer financial products and 
services), whether or not the entity agrees with the issuing agency or 
court's determination. The Bureau acknowledges that certain covered 
nonbanks may from time to time believe a court or agency has erred in 
issuing or obtaining a covered order against them, even in cases where 
the entity has consented to the imposition of the order. For example, 
the entity may believe that the order is based on inaccurate or 
contested allegations of fact or law, or that it resulted from an 
improper change in a regulator's interpretation of the law. The Bureau 
concludes that a covered order is likely probative of risk to consumers 
even in such cases. In most cases, the fact that an agency has devoted 
its limited resources to an action to enforce a covered law, and a 
covered nonbank has agreed to take on obligations based on the alleged 
violation rather than litigate the issue, indicates a heightened 
likelihood that the covered nonbank may present risks to consumers that 
may warrant the Bureau's attention, even if the covered nonbank 
believes that it had arguments for why it was not liable. Excluding 
consent orders or orders that do not contain an admission of liability 
from the rule would unduly restrict the information that would be 
collected regarding many orders that are highly probative of risk to 
consumers, such as orders based upon clearly established and 
significant violations of covered laws, and would limit the rule's 
usefulness. Collecting information about consent orders also will 
assist the Bureau in identifying and evaluating patterns of risks 
associated with orders across companies, industries, products, and 
regions. For example, in conducting its assessments of consumer risk, 
the Bureau will often find it useful to know whether a covered nonbank, 
or type of nonbank, has (or has not) become subject to multiple orders 
across a period of time, or from multiple agencies, or based on 
violations of multiple covered laws, or across product lines, or in 
particular geographic regions, even where such orders were entered into 
upon consent. Thus, it is appropriate to collect information about such 
orders and the entities subject to such orders, and to publish such 
information as provided under Sec.  1092.205.
    Second, the Bureau's collection of information regarding consent 
orders, and its potential republication of those consent orders, does 
not imply any admission of fault or additional liability by the 
applicable covered nonbank. The Bureau acknowledges that many consent 
orders do not contain admissions of wrongdoing, and that entities may 
consent to the imposition of such orders while disagreeing with the 
findings of the agency or court. Such orders may contain provisions 
clearly stating that the entity does not concede or admit liability. 
However, the final rule is intended to provide the Bureau with the 
ability to monitor relevant orders and to inform relevant nonbank 
registry users and the public about them. As stated in the notice of 
proposed rulemaking,\237\ the Bureau believes that requiring 
registration only of orders that contain an admission of liability, or 
a statement setting forth certain types of findings or other factual 
predicates underlying the order, would omit relevant orders. The Bureau 
believes that an order that contains neither an admission of liability 
nor a statement setting forth the factual predicate underlying the 
order may nevertheless be probative of risks to consumers of the type 
that the Bureau is obligated to monitor. Just as entities may consent 
to an order in order not to incur the cost, delay, and uncertainty of 
litigation, so to a Federal agency, State agency, or local agency may 
accept an entity's consent to an order without requiring an admission 
of liability, for similar reasons. Therefore, the final rule includes 
as ``covered orders'' consent orders as well as orders obtained after a 
contested or litigated hearing, lawsuit, or other process. As discussed 
in the description of the proposal above, for purposes of this 
definition, an obligation is ``based on'' an alleged violation where 
the order identifies the covered law in question, asserts or otherwise 
indicates that the covered nonbank has violated it, and imposes the 
obligation on the covered nonbank at least in part as a result of the 
alleged violation, even where the order contains provisions clearly 
stating that the entity does not concede or admit liability. But the 
Bureau's collection and potential publication of information about a 
consent order does not somehow imply that the covered nonbank admits 
liability with respect to the order. Nor does the final rule otherwise 
affect the entity's obligations under the order or any other liability 
that may result from the matters addressed by the order.
---------------------------------------------------------------------------

    \237\ 88 FR 6088 at 6111.
---------------------------------------------------------------------------

    Third, the Bureau concludes that its potential publication of 
information related to consent orders as described at Sec.  1092.205 
will not impose unfair costs on consenting entities. As discussed in 
part VIII, the final rule will not make public any non-public orders, 
limiting the likely costs on covered nonbanks of publishing consent 
orders. Nor will the Bureau's potential publication of information 
relating to consent orders as described at Sec.  1092.205 provide 
inaccurate, inconsistent, or misleading information to consumers, as 
the Bureau will simply be collecting and presenting factual information 
regarding such orders that are already published (or required to be 
published) elsewhere. For

[[Page 56069]]

further discussion of publication, see the section-by-section 
discussion of Sec.  1092.205 below.
    Fourth, the Bureau disagrees with the assertions by commenters that 
the potential deleterious effects of being listed on the registry will 
materially deter entities from agreeing to consent orders or otherwise 
impair the ability of other agencies to administer and enforce the laws 
subject to their jurisdiction. Covered orders are already public. The 
Bureau expects that the disincentive effect of the additional 
visibility for these orders via the nonbank registry would be minimal 
and would be outweighed by benefits of the registry. Likewise, the 
Bureau does not believe that the additional burden associated with 
either the information-collection or the written-statement requirements 
of the final rule is so great as to deter a covered nonbank from self-
reporting, or from entering into a consent agreement or stipulation 
that would otherwise be in its best interests.
    Covered orders are probative of risk to consumers (including risks 
related to developments in markets for consumer financial products and 
services), even if it may be true that not all violations of covered 
laws result in covered orders. The Bureau still has an interest in 
collecting and publishing information regarding such covered orders, 
and in imposing the other requirements of the rule in connection with 
such orders, even if there are other violations of covered laws 
occurring that the nonbank registry does not detect.
    The Bureau is finalizing the definition of the term ``covered 
order'' to include orders issued or obtained by the Bureau itself. The 
Bureau believes the final rule's requirements will provide additional 
useful information in connection with such orders. The identifying 
information submitted by covered nonbanks, and the final rule's 
obligation to update that information in the event of changes, could 
provide new and useful information to the Bureau and the registry. For 
example, a company that moves or changes its name will be required to 
update the registry. Also, Sec.  1092.204's written-statement 
requirements will provide new information on an annual basis about the 
Bureau's orders and the applicable supervised registered entity's 
compliance with them, including the name and title of the supervised 
registered entity's attesting executive. In addition, including orders 
issued or obtained by the Bureau will contribute to the registry's 
comprehensiveness, which in turn will make the registry a more useful 
resource for the Bureau and others in conducting research regarding 
general trends in the enforcement of consumer financial protection 
laws.\238\
---------------------------------------------------------------------------

    \238\ See also the section-by-section discussion of Sec.  
1092.201(k) below regarding the exclusion of orders issued or 
obtained by the Bureau from the final rule's definition of the term 
``NMLS-published covered order.''
---------------------------------------------------------------------------

    Final Sec.  1092.201(e) includes orders issued or obtained by State 
or local agencies. As also discussed in the section-by-section 
discussion of Sec.  1092.201(c) above, the final rule will not provide 
the Bureau with enforcement power over other agencies' orders or with 
authority with respect to violations of Federal and State laws that the 
Bureau lacks jurisdiction to enforce. The Bureau defers to other 
agencies' and courts' interpretations of the orders they have issued or 
obtained under their own authority against persons subject to their 
jurisdiction, and to those agencies' and courts' decisions about 
whether and how to enforce such orders. The Bureau has not and does not 
assert that it may enforce all covered orders or covered laws, nor is 
the final rule a mechanism for it to do so. (To be sure, the definition 
of ``covered order'' does encompass certain orders that the Bureau may 
enforce, such as its own orders issued under Federal consumer financial 
law or the other laws described in Sec.  1092.201(c)(2). But the final 
rule does not affect the Bureau's authority to do so.) \239\
---------------------------------------------------------------------------

    \239\ Excluding orders issued or obtained by State agencies from 
the definition of ``covered order'' would also improperly exclude 
orders issued or obtained by State attorneys general and State 
regulators under 12 U.S.C. 5552.
---------------------------------------------------------------------------

    Instead, the purposes of the final rule are as described herein, 
including to inform the Bureau regarding risks related to covered 
orders issued or obtained by State agencies and local agencies.\240\ 
The Bureau has a legitimate interest in learning about such orders and 
the entities that are subject to them. Collecting and registering such 
orders will assist with monitoring for risks to consumers in the 
offering or provision of consumer financial products and services. The 
Bureau concludes that the information that will be provided via the 
nonbank registry regarding orders issued or obtained by State agencies 
and local agencies will inform the Bureau's functions even though the 
Bureau may lack jurisdiction to enforce the order and may not be 
involved in the issuance or implementation of the order. For the 
reasons described in part IV, covered orders are nevertheless probative 
of risk to consumers (including risks related to developments in 
markets for consumer financial products and services) that is of 
concern to the Bureau, and the Bureau has a legitimate interest in 
becoming informed regarding such orders even where they have been 
issued or obtained by State or local agencies (as opposed to Federal 
agencies). And the identifying information submitted to the nonbank 
registry will help the Bureau identify and monitor the covered nonbanks 
that are subject to such orders, which will also inform the Bureau's 
functions.
---------------------------------------------------------------------------

    \240\ For discussion of the purposes of the final rule's 
written-statement requirements, see part IV(D) and the section-by-
section discussion of Sec.  1092.204 below.
---------------------------------------------------------------------------

    Nothing in the CFPA confines the risks to consumers that must be 
monitored by the Bureau to risks related solely to the Federal 
Government, or solely to orders issued or obtained by Federal agencies. 
To the contrary, the Bureau is tasked with monitoring a wide range of 
sources to inform its assessments of risks to consumers, specifically 
including matters within the jurisdiction of State agencies and local 
agencies. For example, as discussed in part IV(B), CFPA section 
1024(b)(2)(D) provides that the Bureau, in making risk-based 
supervisory prioritization determinations, shall take into account 
``the extent to which . . . institutions are subject to oversight by 
State authorities for consumer protection.'' \241\ The existence of one 
or more orders issued or obtained by the types of State agencies 
described in the final rule in connection with violations of covered 
law would provide important and directly relevant information regarding 
the extent to which nonbanks are subject to oversight by State 
authorities for consumer protection.\242\ Likewise, in allocating its 
resources to perform market monitoring, the Bureau may consider ``the 
legal protections applicable to the offering or provision of a consumer 
financial product or service, including the extent to which the law is 
likely to adequately protect consumers.'' \243\ As the types of ``legal

[[Page 56070]]

protections'' to be considered by the Bureau are not restricted solely 
to protections related to Federal agencies, the Bureau concludes that 
it may consider the information that will be obtained under the final 
rule regarding covered orders issued or obtained by State agencies or 
local agencies under this provision. Another provision, CFPA section 
1024(b)(3), requires coordination with State supervisory authorities 
with respect to nonbanks supervised by the Bureau.\244\ The final rule 
will enhance the Bureau's ability to stay informed and up to date 
regarding recent covered orders issued or obtained by State agencies 
and local agencies against covered nonbanks that are subject to its 
jurisdiction, and thus will facilitate coordination with relevant State 
authorities.
---------------------------------------------------------------------------

    \241\ 12 U.S.C. 5514(b)(2)(D).
    \242\ In addition, as discussed in part IV(B), the Bureau 
concludes that the existence of an order issued or obtained by a 
State agency or a local agency requiring registration under the 
final rule would be probative of risks to consumers as described in 
12 U.S.C. 5514(b)(2)(C) (referring to ``the risks to consumers 
created by the provision of such consumer financial products or 
services''), and determines that the existence of such an order is a 
relevant factor for the class of covered persons subject to the 
final rule under 12 U.S.C. 5514(b)(2)(E) (providing that the Bureau 
shall also take into account ``any other factors that the Bureau 
determines to be relevant to a class of covered persons''). Thus, 
knowledge of such orders issued or obtained by State agencies or 
local agencies will be relevant information in prioritizing and 
scoping the Bureau's supervisory activities under CFPA section 
1024(b) with respect to the covered persons subject to that 
provision.
    \243\ 12 U.S.C. 5512(c)(2)(C).
    \244\ 12 U.S.C. 5514(b)(3).
---------------------------------------------------------------------------

    For similar reasons, the Bureau concludes that it is appropriate to 
impose the final rule's written-statement requirements in connection 
with covered orders issued or obtained by State agencies and local 
agencies against supervised registered entities. The Bureau disagrees 
with commenters' assertions that the Bureau lacks authority to impose 
these requirements with respect to such State agency and local agency 
orders or that such imposition is otherwise inappropriate. As discussed 
above, such orders are probative of the risks to consumers that the 
Bureau is tasked with detecting and assessing as part of its 
supervisory work. Violations of such orders may be probative of 
heightened risks for consumers and borrowers that are relevant to the 
Bureau's exercise of its supervisory authority; thus, for the reasons 
discussed in part IV(D) above and the section-by-section discussion of 
Sec.  1092.204 below, the written-statement requirements will 
facilitate the Bureau's supervision of supervised registered entities 
subject to such orders. The information collected under Sec.  1092.204 
regarding risks to consumers that may be associated with the orders, 
including potential violations of CFPA sections 1031 and 1036, and the 
applicable supervised registered entity's compliance systems and 
procedures will be relevant to the Bureau's supervisory authority even 
where those risks are associated with State agency and local agency 
orders. For the reasons discussed in part IV(D) and the section-by-
section discussion of Sec.  1092.204, imposing Sec.  1092.204's 
requirements with respect to orders issued or obtained by State or 
local agencies also will help ensure that the supervised registered 
entities subject to such orders are legitimate entities and are able to 
perform their obligations to consumers. Contrary to commenters' 
suggestions, the Bureau is not adopting the written-statement 
requirements to administer or enforce orders issued or obtained by 
State or local agencies, but rather to further its statutory purposes 
under CFPA section 1024(b)(7)(A)-(C) with respect to risks to consumers 
that are relevant under Federal law, that are associated with entities 
that are subject to the Bureau's supervisory and examination authority 
under CFPA section 1024(a), and that arise in connection with the 
offering or provision of consumer financial products and services 
subject to the Bureau's jurisdiction.
    In the proposal, the Bureau described a number of types of orders 
that would and would not be considered ``final'' orders under the 
proposal. The Bureau finalizes these descriptions, which are recounted 
in the summary of the proposed rule above. The Bureau's discussion of 
examples of non-final orders, however, was not intended to be 
exhaustive. Other orders that are not final orders are also excluded 
from Sec.  1092.201(e)'s definition of the term ``covered order.''
    The Bureau is finalizing Sec.  1092.201(e) to include orders issued 
or obtained by local agencies. Even if, as a commenter suggests, such 
agencies are less likely than are other agencies to issue or obtain 
relevant consumer protection orders,\245\ information about such 
covered orders as they do issue will be relevant and informative to the 
Bureau. As stated in the description of the proposal above, some local 
agencies have authority to enforce State consumer protection laws, and 
the Bureau believes it is important to include orders issued or 
obtained by such local agencies in the definition.
---------------------------------------------------------------------------

    \245\ The Bureau does not express an opinion on this question. 
The Bureau intends to use the information it obtains through the 
final rule to better understand the quantity and content of covered 
orders and the types of agencies that issue them.
---------------------------------------------------------------------------

    Also, as discussed in part IV(B), it is important for the Bureau to 
collect information about such public orders across markets and 
agencies as provided in the final rule, which will improve the Bureau's 
efforts to determine where entities, either as a group or individually, 
are repeatedly violating the law. The registry will provide a valuable 
mechanism to help ensure that the Bureau is rapidly made aware of such 
repeat offenders across a range of markets and enforcement agencies, 
including State agencies and local agencies. Confining the orders 
collected to those issued or obtained only by Federal agencies would 
unnecessarily limit the information that is provided to the Bureau and 
provide the Bureau with only a partial view of such risks.
    With respect to publication, final Sec.  1092.201(e) requires that 
a ``covered order'' be ``public'' as defined at Sec.  1092.201(m). 
Thus, the covered orders issued or obtained by a State agency or local 
agency that may be published by the nonbank registry under Sec.  
1092.205 will have already been published, or are required to be 
published under governing laws, rules, or orders. As a result, the 
registry will not interfere with but rather reflect the decisions of 
State or local agencies in that regard.
    The Bureau is finalizing the definition of ``covered order'' 
without a requirement that the order be ``enforceable.'' Such a 
requirement would lead to confusion and imprecision as to the final 
rule's submission requirements, as it will not always be clear whether 
any particular covered order is ``enforceable.'' The Bureau does not 
wish to invite arguments from covered nonbanks as to whether any 
particular covered order is or is not actually ``enforceable.'' For 
example, an entity may consent to the imposition of an order while 
privately believing that the order may not properly be enforced against 
it under the correct understanding of the law. The Bureau concludes 
that the nonbank registry should collect and potentially publish 
information about such orders and that they should not be excepted from 
the final rule's definition of ``covered order.'' Moreover, as 
discussed in the section-by-section discussion of Sec.  1092.202(f) 
below, a covered nonbank must submit a final filing to the nonbank 
registry if a covered order is terminated, modified, or abrogated 
(whether by its own terms, by action of the applicable agency, or by a 
court). Amending the definition of ``covered order'' to require that 
the order be ``enforceable'' would reduce the information provided by 
these final filings, at least under certain circumstances. For example, 
where a covered nonbank has registered a covered order with the nonbank 
registry and the order is subsequently terminated, modified, or 
abrogated by action of the applicable agency or court, the order would 
at least theoretically no longer satisfy the ``enforceability'' 
requirement and would therefore no longer qualify as a ``covered 
order.'' Thus, the covered nonbank would not be required to submit the 
final filing required by Sec.  1092.202(f), which is a valuable 
mechanism to clarify the current status of covered orders to the

[[Page 56071]]

Bureau and other users of the nonbank registry.
    Section 1092.201(e)(1)(ii) includes, as a component of the 
definition of the term ``covered order,'' a requirement that the order 
have been issued at least in part in any action or proceeding brought 
by any Federal agency, State agency, or local agency. By requiring that 
the order be issued ``at least in part'' in such an action or 
proceeding, the Bureau will require registration of orders that may 
include certain elements that are not directly related to the action or 
proceeding brought by the agency. For example, an order may impose 
obligations on a covered nonbank in a lawsuit brought by both an agency 
and a set of private plaintiffs. So long as the agency brought the 
action or proceeding, and the order was issued at least in part in that 
action or proceeding, this component of the definition would be 
satisfied with respect to the entire order.
    The commenter's question about nonpublic NCUA letters of 
recommendation appears to refer to a type of confidential NCUA 
supervisory communication. First, ``insured credit unions'' as that 
term is defined at Sec.  1092.101(a) are not covered nonbanks and thus 
are not subject to any of the requirements of the rule. Second, only 
``public'' orders, as the term ``public'' is defined at Sec.  
1092.201(k), are covered orders. To the extent an entity receives a 
confidential letter or other communication from the NCUA that is not 
``public'' as defined, the communication would not be a covered order. 
This would include any order (or portion of any order) that constitutes 
confidential supervisory information of any Federal or State regulator.
    One industry commenter stated the definition of ``covered order'' 
should be clarified because State agencies vary in their approaches to 
enforcing and interpreting orders. While the Bureau does not 
necessarily disagree with the latter statement, the Bureau does not 
believe these differences among State agencies require modification of 
the definition. The Bureau does not believe, and does not intend by 
finalizing the rule to suggest, that all covered orders are somehow 
equivalent. The Bureau has considered the types of orders that it 
believes are probative of risk to consumers and require registration. 
The final rule contains a number of elements, each of which must be 
satisfied in order to cause an order to require registration. An order 
that satisfies the definition of the term ``covered order'' is subject 
to the final rule's requirements with respect to such orders, to the 
extent they apply. It is not clear how any differences among State 
interpretations or approaches would be relevant to determining whether 
an entity must comply with the rule's requirements. Nor does the Bureau 
believe that any such differences would render publication of such 
orders or the other registration information required by the rule to be 
misleading or inappropriate. Differences among State treatment of when 
orders are resolved or closed should not affect filing obligations 
under the final rule. Under Sec.  1092.202(f)(1), if a covered order is 
terminated, modified, or abrogated (whether by its own terms, by action 
of the applicable agency, or by a court), the applicable covered 
nonbank should submit a final filing under that section. The covered 
nonbank should not submit such a final filing based solely on a State 
supervisory or other communication that does not result in the 
termination, modification, or abrogation of the order. Finally, where 
an entity believes in good faith it is not subject to a covered order, 
but is not certain the Bureau would agree with its interpretation, it 
may file a good faith notification under Sec.  1092.202(g).
    The Bureau is finalizing Sec.  1092.201(e)(1) (renumbered as Sec.  
1092.201(e)(1)(i)) without revisions that would have the effect of 
requiring successors or assigns who are not named as parties in an 
order to continue satisfying the rule's requirements with respect to 
that order. The Bureau finalizes its preliminary conclusion in the 
proposal \246\ that the approach described in the proposed rule will 
effectively achieve the Bureau's market-monitoring objectives with 
greater administrative ease. The Bureau is concerned that in many cases 
the application of covered orders to successors and assigns may be 
unclear, and that registration of new entities that are not expressly 
named in the order may cause confusion for the Bureau and other users. 
Also, the Bureau anticipates that, at least in some cases, the issuing 
agency or court will modify its order to ensure that a successor or 
assignee entity will remain subject to the order, and that the new 
entity would then be required to register under Sec.  1092.202. 
However, the Bureau notes that while a new successor or assignee entity 
would not be subject to the rule's requirements with respect to an 
order that did not expressly identify it by name as a party subject to 
the order, the Bureau does not intend to exclude entities that simply 
change their legal name or doing-business-as name following the 
issuance of the order, so long as the same legal entity remains subject 
to the order.\247\
---------------------------------------------------------------------------

    \246\ 88 FR 6088 at 6117.
    \247\ See also the section-by-section discussion of Sec.  
1092.202(b) below.
---------------------------------------------------------------------------

    The Bureau is finalizing Sec.  1092.201(e) without narrowing the 
definition to encompass only orders that involve direct consumer harm, 
as opposed to those that involve only clerical or administrative 
errors. The Bureau also declines to adopt any specific minimum 
quantitative or other thresholds for consumer harm with respect to the 
covered orders that require registration under the final rule. While 
the Bureau agrees that not every covered order will represent an 
equivalent amount of risk, the Bureau is finalizing the rule in a 
manner designed to capture relevant risks. As explained above, when an 
agency issues an order, or seeks a court order, enforcing the law, it 
typically has determined that the problems at the applicable entity are 
sufficiently serious to merit the expenditure of that agency's limited 
resources and perhaps the attention of the courts. Further, in the 
Bureau's experience, the existence of an order identifying a legal 
violation is often probative of broader potential inadequacies in an 
entity's compliance systems, even if the violation addressed in the 
order might be described as ``clerical,'' ``administrative,'' or 
otherwise technical in nature. The Bureau thus concludes that covered 
orders as defined at Sec.  1092.201(e) are likely to be probative of 
relevant risk to consumers. The final rule establishes multiple 
criteria for an order to be a ``covered order'' that is subject to the 
rule's requirements. The Bureau believes these criteria are sufficient 
to identify and distinguish certain kinds of orders that are likely to 
be probative of risk to consumers and that the Bureau has the authority 
to monitor. The Bureau declines to adopt additional criteria that would 
further narrow this definition.
    In addition, the Bureau is concerned that adopting the types of 
distinctions commenters propose would not be administrable. It is not 
clear what would constitute a violation of law that only amounted to a 
``clerical'' or ``administrative'' error, as opposed to a more 
``serious'' violation of a covered law. The Bureau believes that the 
final rule appropriately describes and encapsulates orders that are 
likely to be probative of risk to consumers without adding a carveout 
for ``clerical'' or ``administrative'' violations. Thus, the collection 
and publication of information about such orders, even ones that 
address matters that could appear to some audiences as

[[Page 56072]]

comparatively ``minor,'' will serve the purposes of the final rule 
described in part IV above. Providing for a minimum threshold would 
also add undue complexity to the final rule, depending upon the 
criteria that might be adopted, and could make compliance more 
difficult or burdensome. For example, if the Bureau were to impose 
registration only with respect to orders where a minimum dollar 
threshold of consumer harm or number of consumers affected was related 
to the order, it is not clear that such dollar amounts or numbers would 
be calculated in all cases. Even where such an amount might be 
determined, the full extent of related consumer harm might not be known 
for some time after the issuance of the order, or might be confidential 
supervisory information or otherwise confidential (and the Bureau does 
not intend to reveal such confidential information to the public via 
the nonbank registry). The Bureau declines to introduce such 
complexities into the final rule. While such questions might be 
reasonably answerable with respect to certain types of orders, and many 
individual orders may be structured to permit calculation and public 
disclosure of such threshold amounts, the Bureau intends the 
requirements of the final rule to be sufficiently flexible to collect 
information regarding a wide range of agency and court orders that may 
provide evidence regarding risk to consumers. The Bureau also declines 
to impose materiality requirements as to the type of violations that 
must be declared in written statements submitted under Sec.  1092.204; 
see the section-by-section discussion of this section below for 
additional discussion of these issues.
    Publication of information collected by the registry as intended by 
the Bureau will enable users of the registry to access relevant and 
accurate information about covered orders, including the violations 
that may be associated with such orders, and will not cause but rather 
help prevent confusion and the distribution of misleading information. 
See the section-by-section discussion of Sec.  1092.205 below for 
additional discussion of related issues involving the potential 
publication of registry information.
    The Bureau finalizes Sec.  1091.201(e)(5) (renumbered as Sec.  
1091.201(e)(1)(v)) as proposed. For the reasons stated in the proposal, 
the Bureau believes that registering orders with an effective date on 
or after January 1, 2017, is likely to lead to collecting useful 
information and otherwise will best serve the purposes of the final 
rule described in part IV above. The Bureau declines at this time to 
amend the definition of covered order to include orders with an 
effective date prior to January 1, 2017. While, as discussed in the 
proposal, the Bureau believes earlier orders are highly probative of 
consumer risk, the Bureau finalizes its preliminary conclusion in the 
proposal \248\ that considerations of administrative efficiency favor 
focusing on orders issued within approximately the first several years 
preceding the final rule.
---------------------------------------------------------------------------

    \248\ 88 FR 6088 at 6112.
---------------------------------------------------------------------------

    The Bureau also declines to finalize a later date for this 
provision. This approach would lead to the omission of covered orders 
that are recent enough to be relevant to risk to consumers, and would 
impair the ability of the Bureau and others to identify trends and 
patterns in the information collected. The Bureau acknowledges that in 
the intervening time following the issuance of a covered order and 
before registration, it is possible that many entities will have taken 
steps to address the violations and other issues identified in the 
covered order. The Bureau encourages covered nonbanks to take the steps 
necessary to protect consumers and comply with covered orders and other 
laws. Nevertheless, the Bureau concludes that registration of such 
orders will serve the purposes of the final rule described in part IV 
above. Information regarding the existence of past covered orders will 
inform the Bureau regarding risk to consumers posed by the applicable 
covered nonbank. The issuance of a covered order, and the information 
that will be collected under the final rule about the covered nonbank 
and the order, such as the violations of covered law and related 
obligations identified in such an order, are not rendered irrelevant 
for the purposes of the final rule simply because a covered nonbank has 
taken steps to address the underlying violations or issues. In some 
cases, the existence of a past covered order might prompt the Bureau to 
seek additional information, from the covered nonbank itself or other 
sources, to assess whether the remedial steps taken by the covered 
nonbank have been successful. In other cases, the Bureau might include 
the past covered order in a more general research project aimed at 
assessing trends in orders enforcing the law over time. See the 
section-by-section discussion of Sec.  1092.205 below for additional 
discussion of related issues involving the potential publication of 
registry information.
    The Bureau disagrees with commenters' suggestions that the registry 
would impose an unlawfully retroactive effect or is incompatible with 
constitutional principles relating to ex post facto laws. The mere fact 
that the Bureau is requiring registration based on previously issued 
public orders does not render that requirement impermissibly 
retroactive.\249\ ``[T]he judgment whether a particular [law] acts 
retroactively should be informed and guided by familiar considerations 
of fair notice, reasonable reliance, and settled expectations.'' \250\ 
Taking into account those considerations, the registration and 
publication provisions of Sec. Sec.  1092.202, 1092.203, and 1092.205 
do not operate in an impermissibly retroactive manner. The Bureau is 
requiring covered nonbanks prospectively to register information with 
the Bureau. Going forward, the Bureau plans to use that information as 
a source of market intelligence to use in identifying areas of 
greater--or reduced--risk to consumers, to inform the allocation of the 
Bureau's own resources, and to better understand the entities' 
compliance management systems and processes. Further, Sec.  1092.202 
merely requires covered nonbanks to report covered orders that are 
already published (or required by law, rule, or order to be published). 
Requiring covered nonbanks to submit to the Bureau information about 
such public orders imposes little meaningful burden, and thus does not 
present significant concerns regarding fair notice or upsetting 
reasonable reliance or settled expectations. Nor would any publication 
by the Bureau of registration information as provided at Sec.  1092.205 
impose a meaningful additional burden on entities, given that 
registered orders would already be a matter of public record. It is 
therefore highly unlikely that covered nonbanks would have made 
different decisions with respect to past enforcement actions--e.g., 
whether to settle or vigorously litigate such actions--had they known 
that the enforcement actions could one day subject them to such a low-
burden registration requirement. As a result, the imposition of the 
registration requirement does not have impermissible retroactive 
effect.\251\
---------------------------------------------------------------------------

    \249\ See Landgraf v. USI Film Prods., 511 U.S. 244, 269 n.24 
(1994) (``[A] statute `is not made retroactive merely because it 
draws upon antecedent facts for its operation.''' (quoting Cox v. 
Hart, 260 U.S. 427, 435 (1922)).
    \250\ INS v. St. Cyr, 533 U.S. 289, 321 (2001) (citation 
omitted).
    \251\ Commenters do not appear to argue that Sec.  1092.204's 
written statement requirements would have impermissible retroactive 
effect. Nor could they. As discussed in the section-by-section 
discussion of Sec.  1092.204 below, that section's written statement 
requirements apply only to covered orders with an effective date 
after the applicable nonbank registry implementation date (and thus 
after the final rule's effective date as well). While some covered 
orders with an effective date after the applicable nonbank registry 
implementation date might relate to violations of covered laws 
committed before the final rule's effective date, the Bureau does 
not believe that the prospect of becoming subject to the written-
statement requirements would have had a significant marginal impact 
on a supervised registered entity's decision whether to engage in 
conduct that risked violating covered laws, given the negative 
consequences already associated with committing such legal 
violations.

---------------------------------------------------------------------------

[[Page 56073]]

    Nor does the Bureau believe the U.S. Constitution's prohibition on 
ex post facto laws would apply to the rule, which is adopted under the 
Bureau's civil rulemaking authorities in the CFPA. Under longstanding 
precedent, civil laws generally are not within the protective reach of 
the Ex Post Facto Clause.\252\
---------------------------------------------------------------------------

    \252\ See, e.g., Smith v. Doe, 538 U.S. 84, 92 (2003); Calder v. 
Bull, 3 U.S. (3 Dall.) 386, 391 (1798); see also U.S. CONST. art. I, 
sec. 9, cl. 3 (prohibiting Congress from enacting ex post facto 
laws). While the Bureau believes that the final rule neither is 
unlawfully retroactive nor violates the Ex Post Facto Clause, if a 
court were to conclude that the Bureau cannot apply the rule's 
registration requirements to previously issued covered orders ``that 
remain in effect as of the effective date'' of subpart B, as Sec.  
1092.202(a) provides, the Bureau intends for that language in Sec.  
1092.202(a) to be severable under Sec.  1092.103. Under the 
remaining language of Sec.  1092.202(a), the rule's registration 
requirements would apply after severance ``only with respect to 
covered orders with an effective date on or after the effective 
date'' of subpart B.
---------------------------------------------------------------------------

    For the reasons discussed in the proposal, the final rule includes 
orders that are final by their own terms or under applicable law, even 
where Federal, State, or local law allows for the appeal of such 
orders. The Bureau declines to exempt a broader category of orders as 
to which Federal, State, or local law allows for an appeal. Section 
1092.201(f) states, ``If the issuing agency or a court stays or 
otherwise suspends the effectiveness of the covered order, the 
effective date [of the covered order] shall be delayed until such time 
as the stay or suspension of effectiveness is lifted.'' The 
requirements set forth in Sec.  1092.202(b)(2) with respect to any 
applicable covered order are tied to the order's effective date as 
defined. Thus, Sec.  1092.202 already adequately addresses situations 
where a reviewing agency or court has issued a stay or has otherwise 
suspended the effectiveness of a covered order. In such cases, the 
covered nonbank will not be required to register the covered order 
until 90 days after its new effective date. In contrast, the Bureau 
believes that a covered order that has not been stayed by the issuing 
agency or a court, and has been allowed to come into effect, is likely 
to be probative of risk to consumers, even if avenues of appeal remain 
available.\253\ For that reason, the Bureau has determined not to 
exempt such orders from the rule's requirements. A covered nonbank 
should register such an order within 90 days of its effective date as 
required by Sec.  1092.202(b)(2)(i). Should the covered order be 
terminated, modified, or abrogated, including by a reviewing court's 
decision that renders the order ineffective or void, the covered 
nonbank should submit a final filing under Sec.  1092.202(f)(1), after 
which it would have no further obligation to update its registration 
information. The Bureau is also finalizing a revision to Sec.  
1092.204(a) to clarify that a supervised registered nonbank is not 
required to comply with Sec.  1092.204's written-statement requirements 
in cases where the applicable covered order has not been registered 
under Sec.  1092.202 due to a stay or other agency or court 
action.\254\
---------------------------------------------------------------------------

    \253\ The Bureau's determination on this issue accords with the 
general principle that an unstayed judgment can be enforced even 
while an appeal is pending. See, e.g., Acevedo-Garcia v. Vera-
Monroig, 368 F.3d 49, 58 (1st Cir. 2004) (``The federal rules 
contemplate that, absent a stay, a victorious plaintiff may execute 
on the judgment even while an appeal of that judgment is 
pending.''); 16A Catherine T. Struve, Federal Practice and Procedure 
Sec.  3949.1 (5th ed. 2023) (``Unless the judgment is stayed, the 
district court may (pending appeal) act to enforce the judgment . . 
. .'').
    \254\ See the section-by-section discussion of Sec.  1092.204(a) 
below.
---------------------------------------------------------------------------

    The Bureau does not share the concern expressed in the joint letter 
from State regulators that covered nonbanks will be unable to 
understand or comply with the final rule. With respect to the comment 
that ambiguities in the rule's registration requirements could not be 
satisfactorily addressed because most covered orders will not be issued 
by the Bureau, the Bureau agrees that covered nonbanks will need to 
apply Sec.  1092.201(e)'s definition of ``covered order'' in connection 
with a wide range of orders, many of which will not be drafted by the 
Bureau. However, the Bureau believes that, in the vast majority of 
cases, entities subject to the final rule will be able to clearly 
discern whether they must comply with the registration and written-
statement requirements in connection with any particular order, and 
that such registration will serve the purposes of the rule as stated. 
Moreover, in the event a covered nonbank has concerns that any 
particular order may be deemed a covered order notwithstanding its 
good-faith belief to the contrary, it may file one or more good-faith 
notifications under Sec.  1092.202(g) or Sec.  1092.204(f) with respect 
to that order.
    Regarding the comments in the joint letter questioning how the same 
or similar violations across different business lines would be treated 
as well as how the registration requirements would apply if multiple 
States take unilateral action for a firm's violation of the same 
consumer financial law, a covered nonbank must satisfy the rule's 
requirements with respect to all applicable covered orders that satisfy 
Sec.  1092.201(e)'s definition. For a discussion of the final rule's 
treatment of multiple orders, see the section-by-section discussion of 
Sec.  1092.201(l) below.
    If the public portions of an order do not ``identify [the 
applicable] covered nonbank by name as a party subject to the order'' 
as provided at Sec.  1092.201(e)(1)(i), then the order is not a covered 
order with respect to that covered nonbank. Thus, under the final rule, 
an affiliate of a covered person need not register with respect to a 
covered order unless it is itself named as a party in the public 
portions of the covered order. As discussed in the proposal,\255\ 
orders that indirectly refer to a covered nonbank as an ``affiliate'' 
of a named party, but do not name the covered nonbank as itself a party 
subject to the order, would not be covered orders under final Sec.  
1092.201(e) with respect to the covered nonbank. While Sec.  
1092.202(c) provides that the Bureau's filing instructions may require 
joint or combined submissions to the nonbank registry by covered 
nonbanks that are affiliates as defined in Sec.  1092.101(a), the final 
rule will not require an affiliate to submit information to the nonbank 
registry under this provision in connection with a covered order unless 
public portions of the order identify the affiliate by name as a party 
subject to the order.
---------------------------------------------------------------------------

    \255\ 88 FR 6088 at 6110.
---------------------------------------------------------------------------

    Under Sec.  1092.201(e), the term ``covered order'' may include 
legally enforceable written agreements under sections 8 and 50 of the 
Federal Deposit Insurance Act \256\ or any State counterparts, as well 
as assurances of discontinuances embodied in orders or judgments issued 
by agencies or courts. Likewise, an ``assurance of voluntary 
compliance'' (AVC) accepted by a State agency under State law may 
qualify as a ``covered order'' where it satisfies all of the criteria 
established under Sec.  1092.201(e), including that the AVC contains 
public provisions that impose obligations on the covered nonbank to 
take certain actions or to refrain from taking certain actions, and 
imposes such obligations on the covered nonbank

[[Page 56074]]

based on an alleged violation of a covered law. As with other orders, 
an AVC is not excepted from the definition of ``covered order'' solely 
because it contains neither an admission of liability nor a statement 
setting forth the factual predicate underlying the order. A State 
agency's acceptance of a legally enforceable AVC, as with an agency's 
acceptance of a legally enforceable written agreement, would generally 
occur in an ``action or proceeding brought by any Federal agency, State 
agency, or local agency'' for purposes of Sec.  1092.201(e)(1)(ii).
---------------------------------------------------------------------------

    \256\ 12 U.S.C. 1818, 1831aa.
---------------------------------------------------------------------------

Final Rule
    For the reasons discussed above, the Bureau is finalizing Sec.  
1092.201(e) as proposed, with minor technical edits. The Bureau 
finalizes its preliminary conclusion in the proposal that these 
categories of public orders would assist with monitoring for risks to 
consumers in the offering or provision of consumer financial products 
and services.
Section 1092.201(f) Effective Date
Proposed Rule
    The proposal would have defined the term ``effective date'' to 
mean, in connection with a covered order, the effective date as 
identified in the covered order; however, if no other effective date is 
specified, then the date on which the covered order was issued would 
have been treated as the effective date for purposes of subpart B of 
the proposal. The Bureau anticipated that the effective date for many 
covered orders would be evident from the face of the order, and in 
nearly all cases should be relatively easy to identify.
    Proposed Sec.  1092.201(f) would also have provided that if the 
issuing agency or a court stays or otherwise suspends the effectiveness 
of the covered order, the effective date shall be delayed until such 
time as the stay or suspension of effectiveness is lifted. Thus, the 
registration obligations under proposed subpart B would also have been 
delayed accordingly. The Bureau anticipated that such situations would 
be rare and sought comment on whether this proposal would adequately 
address them.
Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(f)'s definition of the term ``effective date.'' 
See the section-by-section discussion of Sec.  1092.201(e) above for a 
discussion of comments addressing which orders should be included in 
the term ``covered orders.'' For the reasons set forth in the 
description of the proposed rule above, the Bureau is finalizing Sec.  
1092.201(f) as proposed.
Section 1092.201(g) Identifying Information
Proposed Rule
    Proposed Sec.  1092.201(g) would have defined the term 
``identifying information.'' This term would have described the scope 
of identifying information a covered nonbank may be required to submit 
pursuant to proposed Sec.  1092.202(c). Proposed Sec.  1092.201(g) 
would have limited this information to information that is already 
available to the covered nonbank, and which uniquely identifies the 
covered nonbank. As described in proposed Sec.  1092.201(g), this 
information would have included, to the extent already available to the 
covered nonbank, legal name, State of incorporation or organization, 
principal place of business address, and any unique identifiers issued 
by a government agency or standards organization. The Bureau explained 
that examples of the latter identifiers that entities might have been 
required to provide under proposed Sec.  1092.202(c) would include an 
NMLS identifier, a Home Mortgage Disclosure Act (HMDA) Reporter's 
Identification Number, the Legal Entity Identifier (LEI) issued by a 
utility endorsed by the LEI Regulatory Oversight Committee or endorsed 
or otherwise governed by the Global LEI Foundation (GLEIF, or any 
successor of the GLEIF),\257\ and a Federal Tax Identification number.
---------------------------------------------------------------------------

    \257\ See 12 CFR 1003.4(a)(1)(i)(A) (addressing LEIs).
---------------------------------------------------------------------------

    The Bureau believed that this information would help it to identify 
covered nonbanks with specificity, including ensuring that the Bureau 
can identify covered nonbanks' submissions to other registries and 
databases where applicable, such as the NMLS, and HMDA submissions. 
Furthermore, the Bureau believed that, upon publication, this 
information would facilitate the ability of consumers to identify 
covered persons that are registered with the Bureau. The proposal would 
not have required the entity to obtain an identifier. Thus, for 
example, if the proposed NBR system were to have asked about a 
particular type of identifier and that type of identifier had not been 
assigned to the covered nonbank, then under the proposal, the covered 
nonbank would have been able to indicate the identifier is not 
applicable.
Comments Received
    A nonprofit commenter supported the inclusion of the legal entity 
identifier (LEI) in proposed Sec.  1092.201(g) and the inclusion of the 
LEI as a public data element in the nonbank registry. The commenter 
suggested that the Bureau, when an LEI is submitted, could also obtain 
the applicable covered nonbank's legal name, legal address, and 
headquarters address from the Global LEI System.
Response to Comments Received
    In response to the comment about using LEI information, the Bureau 
may require covered nonbanks to submit such information to the registry 
and will consider further opportunities to obtain relevant information 
from other sources including the Global LEI System.
Final Rule
    For the reasons set forth above, the Bureau is finalizing Sec.  
1092.201(g) as proposed, with revisions as described below.
    The proposal would have collected information regarding a covered 
nonbank's State of incorporation or organization. The Bureau is 
adopting a revision to provide that the Bureau may require a covered 
nonbank that is not incorporated or organized in a State to submit to 
the registry the names of any other jurisdiction in which it is 
incorporated or organized. For example, a covered nonbank that is 
incorporated or organized under Federal law or the laws of a foreign 
government should provide that information. If collected, such 
information would be categorized as ``identifying information'' under 
filing instructions issued under Sec.  1092.102(a). The Bureau 
concludes that since certain covered nonbanks may not be incorporated 
or organized under State law, collecting and potentially publishing 
such information may be useful to the Bureau and to other potential 
users of the registry information that the Bureau intends to publish 
under Sec.  1092.205(a).\258\ Under the final rule, where applicable, 
this information will include information regarding the State or other 
jurisdiction where a covered nonbank that is not organized as a 
corporation was formed--for example, where a covered nonbank organized 
as a partnership filed its partnership agreement, where a covered 
nonbank organized as a limited liability company was organized, or 
where the covered nonbank was otherwise formed.
---------------------------------------------------------------------------

    \258\ As discussed in the section-by-section discussion of Sec.  
1092.205(a) below, the Bureau is retaining the discretion not to 
publish information under Sec.  1092.205 based on operational 
considerations.
---------------------------------------------------------------------------

    The Bureau is adopting a revision to provide that the Bureau may 
require a

[[Page 56075]]

covered nonbank to submit to the registry any doing business as or 
fictitious business names, which if collected would be categorized as 
``identifying information'' under filing instructions issued under 
Sec.  1092.102(a). The Bureau concludes that collecting and potentially 
publishing doing business as or fictitious business names (including 
trade names or previously-used names) as ``identifying information'' 
under Sec.  1092.202(c) may be useful to the Bureau and to other 
potential users of the registry information that the Bureau intends to 
publish under Sec.  1092.205(a). Since some companies may use different 
names in different contexts, and it may not always be obvious whether a 
particular doing business as or fictitious business name may apply to a 
covered nonbank, such information may help the Bureau and other 
potential users identify the covered nonbanks that are registered with 
the nonbank registry as well as the covered orders to which they are 
subject.
    In filing instructions adopted under Sec.  1092.102(a), the Bureau 
will specify the ``unique identifiers issued by a government agency or 
standards organization'' that will be collected under Sec.  
1092.202(c). As discussed in the proposal, examples of the latter 
identifiers that entities may be required to provide under proposed 
Sec.  1092.202(c) include an NMLS identifier, a HMDA Reporter's 
Identification Number, and LEI information. The Bureau may also specify 
other unique identifiers in filing instructions in addition to the 
examples discussed in the proposal. The Bureau also may collect, for 
example, an RSSD ID, a unique identifier assigned to financial 
institutions by the Federal Reserve System, and an Electronic Data 
Gathering, Analysis, and Retrieval system (EDGAR) Central Index Key 
(CIK), a unique identifier assigned by the Securities and Exchange 
Commission (SEC) to persons that submit filings to the SEC.
    Under the final rule, the Bureau will not collect or publish 
Federal employer identification numbers (EIN) from covered nonbanks as 
``identifying information'' as that term is defined at Sec.  
1092.201(g), but may determine to collect this information under Sec.  
1092.202(c) as ``administrative information'' that the nonbank registry 
will not publish under Sec.  1092.205(a). In filing instructions issued 
under Sec.  1092.102(a), the Bureau will specify whether and how it 
will collect such information. In addition, a registered entity should 
not submit any Social Security numbers, individual taxpayer 
identification numbers, or other similar personally identifying tax 
information to the nonbank registry, even if the registered entity uses 
an individual's Social Security number in tax documents filed by or 
associated with the entity. As stated in part III(B), the Bureau's 
registry is designed to not collect any protected proprietary, 
personal, or confidential consumer information, and thus, the Bureau 
will not publish, or require public reporting of, any such information.
Section 1092.201(h) Insured Depository Institution
Proposed Rule
    The proposal would have defined the term ``insured depository 
institution'' to have the same meaning as in 12 U.S.C. 5301(18)(A). 
Section 5301(18)(A), in turn, incorporates the meaning of ``insured 
depository institution'' provided in section 3 of the Federal Deposit 
Insurance Act, 12 U.S.C. 1813.\259\
---------------------------------------------------------------------------

    \259\ See 12 U.S.C. 1813(c)(2) (defining ``insured depository 
institution'' as ``any bank or savings association the deposits of 
which are insured by the [Federal Deposit Insurance] Corporation 
pursuant to this chapter'').
---------------------------------------------------------------------------

Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(h)'s definition of ``insured depository 
institution.'' See the section-by-section discussion of Sec.  
1092.201(d) above for a discussion of the final rule's treatment of 
such institutions and their affiliates. For the reasons set forth 
above, the Bureau is finalizing Sec.  1092.201(h) as proposed.
Section 1092.201(i) Local Agency
Proposed Rule
    The proposal would have defined the term ``local agency'' to mean a 
regulatory or enforcement agency or authority of a county, city 
(whether general law or chartered), city and county, municipal 
corporation, district, or other political subdivision of a State, other 
than a State agency. The term would not have included State agencies.
    The Bureau proposed to require registration in connection with 
applicable orders issued or obtained by local agencies. The Bureau 
understood that local agencies do issue or obtain public orders under 
covered laws.\260\ For the reasons described above with respect to 
orders issued by Federal and State agencies, the Bureau believed that 
such orders may indicate risk to consumers, and that obtaining 
information about these orders would support Bureau functions.
---------------------------------------------------------------------------

    \260\ See, e.g., Cal. Bus. & Prof. Code sec. 17204 (authorizing 
enforcement of Cal. Bus. & Prof. Code sec. 17200 by certain county 
counsel and city attorneys).
---------------------------------------------------------------------------

Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(i)'s definition of ``local agency.'' For the 
reasons set forth in the description of the proposed rule above, the 
Bureau is finalizing Sec.  1092.201(i) as proposed.
Section 1092.201(j) NMLS
Proposed Rule
    The proposal did not contain an exemption for covered orders 
published on the NMLS Consumer Access website.
Comments Received
    See the section-by-section discussion of Sec.  1092.203(a) below 
for a discussion of comments received regarding duplication of the 
proposed registry with the NMLS and discussing or requesting an 
exemption for orders that are already published or available via NMLS, 
and the Bureau's responses thereto.
Final Rule
    The Bureau is finalizing a new paragraph (j) to Sec.  1092.201 and 
is renumbering the remainder of the paragraphs accordingly. Section 
1092.201(j) provides that the term ``NMLS'' means the Nationwide 
Multistate Licensing System. As the NMLS's website explains, the NMLS 
is the system of record for non-depository financial services licensing 
or registration for participating State agencies.\261\ The NMLS is 
overseen and operated by the State Regulatory Registry LLC, which was 
established by the Conference of State Bank Supervisors in cooperation 
with the American Association of Residential Mortgage Regulators.\262\
---------------------------------------------------------------------------

    \261\ NMLS Resource Center, About NMLS, https://mortgage.nationwidelicensingsystem.org/about/Pages/default.aspx.
    \262\ Id.
---------------------------------------------------------------------------

Section 1092.201(k) NMLS-Published Covered Order
Proposed Rule
    The proposal did not contain an express alternative registration 
option for covered orders published on the NMLS Consumer Access 
website.
Comments Received
    See the section-by-section discussion of Sec.  1092.203(a) below 
for a discussion of comments received regarding duplication of the 
proposed registry with the NMLS and discussing or requesting an 
exemption for orders that

[[Page 56076]]

are already published on NMLS Consumer Access or otherwise available to 
other regulators via NMLS, and the Bureau's responses thereto.
Final Rule
    The Bureau is finalizing a new paragraph (k) to Sec.  1092.201 and 
is renumbering the remainder of the paragraphs accordingly. Section 
1092.201(k) provides that the term NMLS-published covered order 
generally means a covered order that is published on the NMLS Consumer 
Access website, www.NMLSConsumerAccess.org.
    For the reasons discussed in the section-by-section discussion of 
Sec.  1092.203 below, this section would further provide that no 
covered order issued or obtained at least in part by the Bureau shall 
be an NMLS-published covered order. Thus, where the Bureau has issued a 
covered order, or has obtained a covered order from a court, that 
covered order will not be an NMLS-published covered order under the 
final rule. Covered nonbanks must comply with the requirements of Sec.  
1092.202 and (where applicable) Sec.  1092.204 with respect to such 
Bureau orders, and may not elect to comply with the one-time 
registration option described in Sec.  1092.203 with respect to such 
Bureau orders.
Section 1092.201(l) Order
Proposed Rule
    The proposal would have defined the term ``order'' to include any 
written order or judgment issued by an agency or court in an 
investigation, matter, or proceeding. The Bureau explained that the 
term would have included orders or judgments issued after trials or 
agency hearings. It would also have included default judgments or 
orders issued after an entity fails to properly respond to charges or 
claims made against it. In addition, it would have included orders or 
judgments issued to resolve matters without the need for further 
litigation, including stipulated or consent orders, decrees, or 
judgments, as well as settlements, multistate settlements, or 
assurances of discontinuances embodied in orders or judgments issued by 
agencies or courts. Furthermore, the term would have included cease-
and-desist orders and orders suspending, conditioning, or revoking a 
license based on a violation of law. The proposed definition would also 
have included legally enforceable written agreements under sections 8 
and 50 of the Federal Deposit Insurance Act \263\ or any State 
counterparts.
---------------------------------------------------------------------------

    \263\ 12 U.S.C. 1818, 1831aa.
---------------------------------------------------------------------------

    The Bureau explained that the proposed definition of the term 
``order'' would have included an order or judgment issued by one agency 
or a single order or judgment jointly issued by multiple agencies. 
However, where more than one agency issues a distinct order under its 
own authority, or a court issues distinct orders with respect to the 
different parties in connection with various actions or proceedings, 
even where the orders involve the same subject matter or laws, each 
order would have been considered a separate order under the proposed 
definition.
Comments Received
    An industry commenter stated that the Bureau should limit the 
number of times a single instance of a violation needs to be reported 
where multiple agencies issue orders based on the same facts. The 
commenter stated that entities should only need to submit to the NBR 
system one order per violation to avoid reporting multiple listings for 
one incident in a multi-State enforcement action, and that this 
approach would not deprive the public or the Bureau of any information, 
since under the proposed rule registered entities would already need to 
identify the government entity that issued the order.
Response to Comments Received
    In response to the industry commenter, if multiple agencies join a 
single order, that order would be the only ``covered order'' requiring 
registration under the final rule. However, if multiple agencies issue 
distinct and different orders in connection with the same facts or 
matter, each such order (if it satisfies the other criteria established 
by the final rule) would be a distinct ``covered order'' that would 
require separate registration (and, where applicable, designation of an 
attesting executive and submission of a written statement under Sec.  
1092.204).
    The Bureau declines to adopt the commenter's suggestion to treat 
multiple orders as a single order under certain circumstances. As 
stated in the notice of proposed rulemaking, the Bureau ``anticipates 
that agency and court orders will vary widely in form and content, 
depending in part on such matters as the relevant individual laws being 
enforced, the historical practices of the various enforcement agencies, 
and the negotiations and facts and circumstances underlying specific 
orders.'' \264\ The Bureau anticipates that such orders will often 
contain different findings of fact and law, impose different 
obligations, and otherwise contain meaningful differences such that 
requiring registration of each such order would be useful to the Bureau 
and other users of the nonbank registry. Also, permitting certain 
orders to be treated as a single order would create unnecessary 
complexity and confusion for registrants and other users of the nonbank 
registry. Among other things, the final rule would have to establish 
which orders would be sufficiently similar to warrant such treatment. 
The Bureau declines to require such determinations as part of the 
registration process.
---------------------------------------------------------------------------

    \264\ 88 FR 6088 at 6111.
---------------------------------------------------------------------------

Final Rule
    For the reasons set forth above, the Bureau is finalizing Sec.  
1092.201(j) (renumbered as Sec.  1092.201(l)) as proposed.
Section 1092.201(m) Public
Proposed Rule
    The proposal would have defined the term ``public'' to mean, with 
respect to a covered order or any portion thereof, published by the 
issuing agency or court, or required by any provision of Federal or 
State law, rule, or order to be published by the issuing agency or 
court. The proposal would have clarified that the term ``public'' does 
not include orders or portions of orders that constitute confidential 
supervisory information of any Federal or State agency.
    The Bureau explained that the proposed term would have included 
orders that are actually published by the issuing agency or court, as 
well as orders that are required by any provision of Federal or State 
law, rule, or order to be published by the issuing agency or court. For 
example, section 8(u) of the Federal Deposit Insurance Act \265\ 
requires the publication of certain types of Federal banking agency 
orders. The proposed definition was intended to include those orders, 
as well as those required to be published by any other similar Federal 
or State law.
---------------------------------------------------------------------------

    \265\ 12 U.S.C. 1818(u).
---------------------------------------------------------------------------

    The Bureau explained that, under the proposal, an order would only 
be ``public'' if it has been released or disseminated (or is required 
to be released or disseminated) in a manner such that the order is 
accessible by the general public--for example, by posting the order on 
a publicly accessible website or by publishing it in a written format 
generally available to members of the public. The proposed term, 
however, would not have included documents that are not made generally

[[Page 56077]]

available but are disclosed to specific persons, such as in response to 
Federal or State Freedom of Information Act or open records law 
requests or as part of litigation discovery proceedings. Under the 
proposal, an order also would have only qualified as ``public'' if it 
is published (or required to be published) ``by the issuing agency or 
court.'' Therefore, independent publication by a third party, such as 
publication that may occur in connection with a covered person's 
securities disclosures, would not make an order ``public'' within the 
meaning of the proposal.\266\ The Bureau did not anticipate that 
requiring registration of orders disclosed only through such methods as 
freedom-of-information requests or securities disclosures would 
materially improve the quantity and quality of the information provided 
to the nonbank registry. To the contrary, the Bureau anticipated that 
third-party disclosures in the securities context, or pursuant to 
freedom-of-information requests, may sometimes fail to capture all 
significant aspects of an order. The Bureau was also concerned that if 
such types of disclosures were included in the final rule, subpart B's 
registration requirements might affect an entity's decisions regarding 
securities or litigation disclosures in a manner not intended by the 
Bureau.
---------------------------------------------------------------------------

    \266\ By contrast, the Bureau explained, an order would qualify 
as ``public'' where the issuing agency or court makes the order 
available to a third-party printing service or reporter for the 
purpose of publishing the order in a publicly available format.
---------------------------------------------------------------------------

    The proposed term would have excluded orders or portions of orders 
that constitute confidential supervisory information of any Federal or 
State agency. The Bureau was concerned that requiring registration and 
disclosure of confidential supervisory information might interfere with 
the functions and missions of other agencies and did not believe that 
requiring such registration and disclosure was necessary to accomplish 
the purposes of the proposed rule. The Bureau noted that such agencies 
may rely on confidential communications with covered nonbanks in order 
to, for example, foster full cooperation between those institutions and 
their regulators and to protect those institutions and the public from 
harm that could result from the disclosure of agency concerns regarding 
the integrity and security of these institutions. The proposed 
definition would have therefore expressly excluded confidential 
supervisory information. Where an order is not clearly marked or 
otherwise designated by the regulator as confidential supervisory 
information, the Bureau would have expected the entity to have 
confirmed the confidential supervisory information status of any order 
or portion of an order with its regulator before relying on that status 
in connection with the proposed subpart B's registration requirements.
Comments Received
    A Tribal commenter stated that although many State agency orders 
are publicly available, this is not the case for State court orders, 
and requested that the Bureau clarify this proposed definition.
    An industry commenter stated that the proposal's requirement to 
submit redacted orders would confuse the public, and that in cases 
where a portion of a covered order is redacted or confidential, the 
whole order should stay off the registry.
Response to Comments Received
    In response to the Tribal commenter, the Bureau believes that this 
definition clearly describes the term ``public'' with respect to orders 
that are issued by State courts as well as other orders that may be 
issued or obtained by a Federal agency, State agency, or local agency, 
as described in Sec.  1092.201(e)(1)(i). As detailed in the above 
description of the proposal, an order (or a portion of an order) issued 
by a State court would only be ``public'' if it has been released or 
disseminated (or is required to be released or disseminated) in a 
manner such that the order (or portion thereof) is accessible by the 
general public--for example, by posting the order (or portion thereof) 
on a publicly accessible website or by publishing it in a written 
format generally available to members of the public. If the issuing 
court (including a State court) or agency does not publish an order (or 
portion thereof) in this way, and the order (or portion thereof) is not 
required to be so published, then the order (or portion thereof) is not 
``public'' under the definition. On the other hand, if the issuing 
court or agency does publish an order (or portion thereof) in this way, 
or the order (or portion thereof) is required to be so published, then 
the order (or portion thereof) is ``public'' under the definition. The 
Bureau declines to further narrow or otherwise amend this definition, 
as it concludes the definition as finalized will help ensure that the 
registry will obtain adequate information regarding relevant orders to 
achieve the registry's objectives.
    Under the final rule, registrants should submit only the public 
portions of covered orders. The Bureau believes that both submission of 
and publication of public portions of such orders, and only public 
portions of such orders, will best serve the purposes of the registry. 
The Bureau disagrees that either the submission of or the publication 
of redacted orders will confuse the public or other users of the 
nonbank registry, especially considering that the unredacted portions 
of orders submitted to the Bureau will, by definition, already be 
published (or required to be published) elsewhere. As discussed in the 
section-by-section discussion of Sec.  1092.201(e) above, the Bureau is 
excluding from the rule's information collection requirements nonpublic 
portions of orders in order to help protect the confidential processes 
of other agencies, including their supervisory processes. But the 
Bureau believes that the other portions of such orders remain relevant 
and should be collected and potentially published under the final 
rule.\267\
---------------------------------------------------------------------------

    \267\ In the proposal, the Bureau considered requiring covered 
nonbanks to submit to the Bureau portions of orders that constitute 
confidential supervisory information under proposed Sec.  1092.202, 
but then exempting those confidential portions from publication 
under proposed Sec.  1092.204. See 88 FR 6088 at 6114. The Bureau 
finalizes its preliminary conclusion in the proposal that the 
administrative burden associated with implementing such an approach 
likely outweighs the advantage of collecting such confidential 
portions of orders under the proposed rule. See id. The Bureau notes 
that it can use other mechanisms to obtain confidential supervisory 
information from other regulators in appropriate cases.
---------------------------------------------------------------------------

Final Rule
    For the reasons set forth below above and as follows, the Bureau is 
finalizing Sec.  1092.201(k) (renumbered as Sec.  1092.201(m)) as 
proposed, with revisions to provide that the term ``public'' (1) 
encompasses covered orders required to be published by the issuing 
agency or court under any provision of local law, rule, or order, and 
(2) does not include orders or portions of orders that constitute 
confidential supervisory information of any local agency. The Bureau is 
finalizing these revisions to reflect that under Sec.  
1092.201(e)(1)(i), covered orders can be issued or obtained by local 
agencies, which may operate under local laws, rules, or orders 
regarding publication requirements, and which might claim to have 
``confidential supervisory information.''
201(n) Registered Entity
Proposed Rule
    The proposal would have defined the term ``registered entity'' to 
mean any person registered or required to be registered under proposed 
subpart B. The Bureau explained that, under the proposal, entities that 
fail to comply

[[Page 56078]]

with a requirement to register under proposed subpart B would have 
nonetheless still been subject to all of the requirements applicable to 
registered entities under proposed subpart B. If such an entity were a 
supervised registered entity, it would have also been subject to the 
requirements applicable to a supervised registered entity under 
proposed subpart B.
Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(l)'s definition of ``registered entity.'' For 
the reasons set forth in the description of the proposed rule above, 
the Bureau is finalizing Sec.  1092.201(l) (renumbered as Sec.  
1092.201(n)) as proposed.
Section 1092.201(o) Remain(s) In Effect
Proposed Rule
    The proposal would have defined the terms ``remain in effect'' and 
``remains in effect'' to mean, with respect to any covered order, that 
the covered nonbank remains subject to public provisions that impose 
obligations on the covered nonbank to take certain actions or to 
refrain from taking certain actions based on an alleged violation of a 
covered law.
    Proposed Sec.  1092.202(a) would have used this proposed term in 
defining the scope of proposed Sec.  1092.202's registration 
requirement. Proposed Sec.  1092.202(f) would have used this proposed 
term in specifying when a covered nonbank would be required to submit a 
final filing to the NBR system and would be permitted to cease updating 
its registration information and filing written statements with respect 
to a covered order.
Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(m)'s definition of ``remain(s) in effect.'' For 
the reasons set forth in the description of the proposed rule above, 
the Bureau is finalizing Sec.  1092.201(m) (renumbered as Sec.  
1092.201(n)) as proposed.
Section 1092.201(p) State Agency
Proposed Rule
    The proposal would have defined the term ``State agency'' to mean 
the attorney general (or the equivalent thereof) of any State and any 
other State regulatory or enforcement agency or authority. The Bureau 
intended this definition to encompass all State government officials 
and regulators authorized to bring actions to enforce any covered law, 
including actions to enforce the CFPA's provisions or regulations 
issued under the CFPA pursuant to CFPA section 1042(a)(1).\268\ The 
term would also have included regulatory or enforcement agencies of 
certain Tribal governments that are included in the CFPA's definition 
of the term ``State.'' \269\
---------------------------------------------------------------------------

    \268\ 12 U.S.C. 5552(a)(1).
    \269\ See 12 U.S.C. 5481(27) (defining ``State'' to include 
``any federally recognized Indian tribe, as defined by the Secretary 
of the Interior under'' 25 U.S.C. 5131(a)).
---------------------------------------------------------------------------

Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.201(n)'s definition of ``State agency.'' For the 
reasons set forth in the description of the proposed rule above, the 
Bureau is finalizing Sec.  1092.201(n) (renumbered as Sec.  
1092.201(o)) as proposed.
Section 1092.201(q) Supervised Registered Entity
Proposed Rule
    The proposal would have defined the term ``supervised registered 
entity'' to mean a registered entity that is subject to supervision and 
examination by the Bureau pursuant to CFPA section 1024(a),\270\ with 
certain exceptions.\271\ The Bureau explained that the CFPA authorizes 
the Bureau to require reports and conduct examinations of certain 
persons, as described in CFPA section 1024(a)(1)(A)-(E); the proposed 
term would have referred to a registered entity that is subject to 
supervision and examination by the Bureau pursuant to any of those 
provisions.\272\
---------------------------------------------------------------------------

    \270\ 12 U.S.C. 5514(a).
    \271\ The Bureau explained that an affiliate of an insured 
depository institution that is subject to examination and 
supervision by the Bureau under 12 U.S.C. 5515(a) would not be 
included in the proposed definition of supervised registered entity, 
where the affiliate is not subject to examination and supervision by 
the Bureau under 12 U.S.C. 5514(a). See 12 U.S.C. 5514(a)(3)(A) 
(providing that 12 U.S.C. 5514 shall not apply to persons described 
in 12 U.S.C. 5515(a) or 5516(a)).
    \272\ The Bureau explained that the proposal would not increase 
the number of entities subject to Bureau examinations or otherwise 
modify the scope of the Bureau's supervisory jurisdiction.
---------------------------------------------------------------------------

    For purposes of proposed Sec.  1092.201(o), the proposal would have 
clarified that the term ``subject to supervision and examination by the 
Bureau pursuant to CFPA section 1024(a)'' would include an entity that 
qualifies as a larger participant of a market for consumer financial 
products or services under any rule issued by the Bureau pursuant to 
CFPA section 1024(a)(1)(B) and (a)(2) (providing Bureau supervisory 
authority over larger participants in certain markets as defined by 
Bureau rule), or that is subject to an order issued by the Bureau 
pursuant to CFPA section 1024(a)(1)(C) (providing Bureau supervisory 
authority over certain nonbank covered persons based on risk 
determination). The Bureau proposed this language only to clarify and 
make express that such persons would be included in the proposed 
definition of the term supervised registered entity. The Bureau 
explained that it was not proposing by means of this language to limit 
the scope of the term ``supervised registered entity.''
    Under the proposed definition of ``supervised registered entity,'' 
the Bureau explained that it need not have previously exercised its 
authority to require reports from, or conduct examinations of, a 
particular registered entity for that entity to qualify as a supervised 
registered entity. A registered entity would have qualified as a 
supervised registered entity if the Bureau could require reports from, 
or conduct examinations of, that entity because it is a person 
described in CFPA section 1024(a)(1). Such an entity would have been 
``subject to supervision and examination'' within the meaning of the 
proposal even if the Bureau has never previously exercised its 
authority to require reports or conduct examinations with respect to 
that entity.
    The Bureau explained that persons would be subject to the 
proposal's requirements applicable to ``supervised registered 
entities'' so long as they satisfy the proposed definition of that 
term. The Bureau recognized that certain entities may, in certain 
circumstances, satisfy the definition only for a limited period of 
time. For example, the Bureau noted that an entity's activity levels 
may change in such a manner as to cause the entity to cease to qualify 
as a larger participant of a market for consumer financial products and 
services as defined by CFPA section 1024(a)(1)(B) and 12 CFR part 
1090,\273\ or an entity may cease to be a person subject to Bureau 
supervision under CFPA section 1024(a)(1)(C) and 12 CFR part 1091.\274\ 
An entity would have been required to comply with the proposal's

[[Page 56079]]

requirements applicable to ``supervised registered entities'' so long 
as it qualifies as such an entity, but not once it ceases to so 
qualify. Thus, for example, the Bureau explained that depending upon 
the timing of events, a supervised registered entity might be required 
to register with, and submit information to, the NBR system under 
proposed Sec.  1092.202 but not subsequently submit a written statement 
under proposed Sec.  1092.203 if it ceases to qualify as a supervised 
registered entity before Sec.  1092.203(d)'s submission deadline.
---------------------------------------------------------------------------

    \273\ The Bureau explained that such a determination would be 
made under the provisions of 12 CFR part 1090. See, e.g., 12 CFR 
1090.102 (providing that ``[a] person qualifying as a larger 
participant under subpart B of [12 CFR part 1090] shall not cease to 
be a larger participant under [12 CFR part 1090] until two years 
from the first day of the tax year in which the person last met the 
applicable test under subpart B'').
    \274\ The Bureau explained that such a determination would be 
made under the provisions of 12 CFR part 1091. See, e.g., 12 CFR 
1091.113 (regarding petitions for termination of an order issued 
under 12 CFR 1091.109).
---------------------------------------------------------------------------

    The Bureau believed that applying proposed Sec.  1092.203's 
requirements to supervised registered entities so long as they satisfy 
the proposed definition of that term, even if they do so for limited 
periods of time, would serve its goals in imposing such requirements, 
as described in section IV(D) of the proposal. The Bureau did not 
believe that it should exempt, or otherwise distinguish for purposes of 
the proposal, entities that are subject to supervision under CFPA 
section 1024(a) for limited periods of time. The Bureau believed that 
it is important to obtain reports from such supervised registered 
entities under proposed Sec.  1092.203 for the reasons discussed in 
section IV(D) of the proposal, including to ensure they are legitimate 
entities and able to perform their obligations to consumers, to detect 
and assess risks to consumers related to entities subject to Bureau 
supervision, and to facilitate its assessments in connection with its 
risk-based supervisory program under CFPA section 1024(b)(2). In 
addition, the Bureau explained that requiring regular submission of 
written statements from such entities would assist the Bureau in 
determining whether the entity should continue to be subject to Bureau 
supervision under CFPA section 1024(a)(1)(C), for example. However, the 
Bureau preliminarily concluded that obtaining such written statements 
from entities that are no longer subject to the Bureau's supervision 
and examination authority under CFPA section 1024(a) is not necessary 
to serve these purposes.\275\
---------------------------------------------------------------------------

    \275\ The Bureau is adopting the proposal's approach to this 
issue in the final rule and finalizes its preliminary conclusion to 
this effect.
---------------------------------------------------------------------------

    The Bureau explained that its proposed approach to applying the 
term ``supervised registered entity'' would also have extended to the 
recordkeeping requirements proposed in Sec.  1092.203(e). Proposed 
Sec.  1092.203(e) would have required a supervised registered entity to 
maintain certain documents and other records for five years after the 
submission of a written statement is required, and to make such 
documents and other records available to the Bureau upon request. The 
Bureau explained that, once a supervised registered entity ceased to 
qualify as a supervised registered entity under proposed Sec.  
1092.201(o), it would no longer have been subject to Sec.  
1092.203(e)'s requirement to maintain and provide such records. (The 
Bureau noted that the entity may nevertheless be subject to other 
requirements to maintain and provide such records, where such 
requirements are imposed by Federal consumer financial law or other 
applicable law.) The Bureau further explained that if, because of a 
change in circumstances, the entity later once again qualifies as a 
supervised registered entity, the entity would once again have become 
subject to proposed Sec.  1092.203(e)'s recordkeeping requirement, but 
only as to conduct undertaken to comply with proposed Sec.  1092.203 
that occurs after the entity requalifies as a supervised registered 
entity.
    The proposal would have provided that the term ``supervised 
registered entity'' would not include a service provider that is 
subject to Bureau examination and supervision solely in its capacity as 
a service provider and that is not otherwise subject to Bureau 
supervision and examination. The Bureau noted that CFPA section 1024(e) 
authorizes the Bureau to exercise supervisory authority with respect to 
a service provider to a person described in CFPA section 
1024(a)(1).\276\ Additionally, CFPA sections 1025(d) and 1026(e) 
authorize the Bureau to exercise supervisory authority with respect to 
certain other service providers.\277\ The Bureau explained that this 
provision of the proposed definition clarifies that the term 
``supervised registered entity'' would not have included a registered 
entity that is subject to Bureau examination and supervision solely in 
its capacity as a service provider under any of these provisions. 
However, the Bureau explained, the term supervised registered entity 
would have included a registered entity if the registered entity is 
otherwise subject to Bureau supervision and examination under CFPA 
section 1024(a)--i.e., if the registered entity is a person that is 
described in CFPA section 1024(a)(1)--even if the registered entity is 
also a service provider for some purposes under the CFPA.\278\ The 
Bureau preliminarily concluded that, at least in the first instance, 
the requirements set forth in proposed Sec.  1092.203 are best directed 
at persons described in CFPA section 1024(a). The Bureau believed that 
it could achieve the anticipated benefits described above without 
extending its coverage to service providers subject to supervision 
under CFPA section 1024.
---------------------------------------------------------------------------

    \276\ 12 U.S.C. 5514(e).
    \277\ 12 U.S.C. 5515(d), 5516(e).
    \278\ As discussed above, entities that are service providers 
may nevertheless also be covered persons under the CFPA.
---------------------------------------------------------------------------

    Proposed Sec.  1092.201(o)(2) would have provided that the term 
``supervised registered entity'' would not include a motor vehicle 
dealer that is predominantly engaged in the sale and servicing of motor 
vehicles, the leasing and servicing of motor vehicles, or both, within 
the meaning of 12 U.S.C. 5519(a), except to the extent such a person 
engages in functions that are excepted from the application of CFPA 
section 1029(a) as described in CFPA 1029(b).\279\ Proposed Sec.  
1092.201(e), discussed above, would have further provided that the only 
orders issued to such motor vehicle dealers that would subject the 
dealer to the requirements of proposed Sec. Sec.  1092.202 and 1092.203 
would be those issued in connection with the functions that are 
excepted from the application of CFPA section 1029(a) as described in 
CFPA 1029(b).
---------------------------------------------------------------------------

    \279\ 12 U.S.C. 5519 (``Exclusion for Auto Dealers''). The 
Bureau explained that, as with other supervised registered entities, 
the motor vehicle dealer would only qualify as a ``supervised 
registered entity'' if it were subject to the Bureau's supervisory 
jurisdiction under 12 U.S.C. 5514(a). Technically, the Bureau noted, 
the exclusion in proposed Sec.  1092.201(o)(2) should be unnecessary 
because it is identical to the proposed exclusion from the 
definition of ``covered nonbank'' in proposed Sec.  1092.201(d)(4), 
and only covered nonbanks can qualify as supervised registered 
entities. Nevertheless, the Bureau proposed Sec.  1092.201(o)(2) to 
reiterate that the exclusion described in proposed Sec.  
1092.201(d)(4) also limits which entities qualify as ``supervised 
registered entities.''
---------------------------------------------------------------------------

    Proposed Sec.  1092.201(o)(3) would have provided that the term 
``supervised registered entity'' would not include a person that 
qualifies as a covered person based solely on conduct that is the 
subject of, and that is not otherwise exempted from, an exclusion from 
the Bureau's supervisory authority under CFPA section 1027.\280\ The 
Bureau explained that this proposed component of the term ``supervised 
registered entity'' would have been similar to a component in the 
proposed definition of the term ``covered nonbank,'' as discussed in 
more detail in the section-by-section discussion of proposed Sec.  
1092.201(d), above. However, while proposed Sec.  1092.201(d) would 
have

[[Page 56080]]

described exclusions from the Bureau's rulemaking authority, proposed 
Sec.  1092.201(o)(3) would have described exclusions from the Bureau's 
supervisory authority. This provision would have clarified that persons 
excluded from the supervisory authority of the Bureau under one or more 
of the provisions of section 1027 of the CFPA would not be ``supervised 
registered entities.'' However, where the CFPA provides that any of the 
activities engaged in by such persons are subject to the Bureau's 
supervisory authority, the Bureau noted that this limitation would not 
have excluded the person from qualifying as a ``supervised registered 
entity.'' For example, the Bureau noted, CFPA section 1027(l)(1) 
provides an exclusion from the Bureau's supervisory authority for 
certain persons engaging in certain activities relating to charitable 
contributions.\281\ Under the proposal, a person would not have been 
deemed a ``supervised registered entity'' if it qualifies for this 
statutory exclusion and is not otherwise exempt from it. But CFPA 
section 1027(l)(2) exempts certain activities from this statutory 
exclusion by providing that ``the exclusion in [CFPA section 
1027(l)(1)] does not apply to any activities not described in [CFPA 
section 1027(l)(1)] that are the offering or provision of any consumer 
financial product or service, or are otherwise subject to any 
enumerated consumer law or any law for which authorities are 
transferred under subtitle F or H.'' \282\ Under proposed Sec.  
1092.201(o), an entity described in CFPA section 1027(l)(1) engaging in 
the activities described therein would have qualified as a ``supervised 
registered entity'' so long as it also engages in any of the activities 
described in CFPA section 1027(l)(2). And, as a ``supervised registered 
entity'' under the proposed Sec.  1092.201(o), such entity would have 
been subject to all of proposed Sec.  1092.203's requirements 
applicable to ``supervised registered entities'' with respect to any 
``covered order,'' regardless of whether the applicable ``covered 
order'' addressed conduct subject to the statutory exclusion in CFPA 
section 1027(l)(1).
---------------------------------------------------------------------------

    \280\ 12 U.S.C. 5517.
    \281\ 12 U.S.C. 5517(l)(1) (``Exclusion for Activities Relating 
to Charitable Contributions'').
    \282\ 12 U.S.C. 5517(l)(2).
---------------------------------------------------------------------------

    Finally, proposed Sec.  1092.201(o)(4) would have provided that the 
term ``supervised registered entity'' would not include a person with 
less than $1 million in annual receipts. The exclusion would have been 
based on the receipts resulting from offering or providing all consumer 
financial products and services described in CFPA section 1024(a).\283\ 
The Bureau proposed to define the term ``annual receipts'' to have the 
same meaning as it has in Sec.  1090.104(a) of the Bureau's 
regulations, including the provisions of that definition at paragraph 
(i) regarding receipts, paragraph (ii) regarding period of measurement, 
and paragraph (iii) regarding annual receipts of affiliated 
companies.\284\ The Bureau proposed the exclusion in proposed Sec.  
1092.201(o) for two reasons. First, the Bureau noted that providers of 
consumer financial products and services with significantly lower 
levels of receipts generally pose lower risks because they engage with 
fewer consumers, obtain less money from those consumers, or both. 
Second, the Bureau explained that the information collection burdens on 
entities with receipts of $1 million or less, on a relative basis, 
generally would be higher than for larger entities.
---------------------------------------------------------------------------

    \283\ 12 U.S.C. 5514(a).
    \284\ 12 CFR 1090.104(a).
---------------------------------------------------------------------------

    The Bureau noted that the proposed exclusion from the definition of 
``supervised registered entity'' based on volume of annual receipts 
would have also been consistent with the CFPA's requirement that the 
Bureau take entity size into account as part of its risk-based 
supervision program.\285\ Accordingly, the Bureau proposed to exclude 
persons with less than $1 million in annual receipts from the proposed 
annual reporting requirements applicable to supervised registered 
entities under proposed Sec.  1092.203.
---------------------------------------------------------------------------

    \285\ See 12 U.S.C. 5514(b)(2)(A), (B) (requiring the Bureau to 
take into consideration ``the asset size of the covered person'' and 
``the volume of transactions involving consumer financial products 
or services in which the covered person engages'').
---------------------------------------------------------------------------

    However, the Bureau did not propose to exclude such smaller 
entities from the information-collection requirements provided in 
proposed Sec.  1092.202. The Bureau believed that the limited burden 
that would be imposed on such entities due to such information-
collection requirements would be warranted in light of the market-
monitoring benefits to the Bureau and other users of the NBR system. 
The Bureau explained that it could evaluate the need for additional 
supervisory attention related to a smaller supervised nonbank based on 
its submissions under proposed Sec.  1092.202 and any additional 
information at its disposal. As discussed in section IV of the proposal 
and the section-by-section discussion of proposed Sec.  1092.202, those 
submissions would have provided additional information relevant to the 
Bureau's assessments of risk in connection with its prioritization 
efforts under CFPA section 1024(b)(2).\286\
---------------------------------------------------------------------------

    \286\ 12 U.S.C. 5514(b)(2).
---------------------------------------------------------------------------

Comments Received
    A consumer advocate commenter objected to proposed Sec.  
1092.201(o)(1), which would have provided that the term ``supervised 
registered entity'' does not include a service provider that is subject 
to Bureau examination and supervision solely in its capacity as a 
service provider and that is not otherwise subject to Bureau 
supervision and examination. The consumer advocate commenter stated 
that third party service providers can present risk even when they are 
not supervised by the Bureau.
    Industry commenters stated that the Bureau should raise the $1 
million amount described in proposed Sec.  1092.201(o)(4), which would 
have excluded from the definition of ``supervised registered entity'' a 
person with less than $1 million in annual receipts resulting from 
offering or providing all consumer financial products and services 
described in 12 U.S.C. 5514(a). Commenters stated that the proposed $1 
million annual receipts amount was essentially meaningless because it 
would not exclude most nonbanks, and in particular that the proposed $1 
million annual receipts amount was unlikely to exclude a meaningful 
number of mortgage lenders and mortgage servicers. An industry 
commenter also stated that the proposed $1 million annual receipts 
amount was contrary to CFPA section 1024(b)(2)'s requirements regarding 
the Bureau's risk-based supervision program for nonbanks.\287\
---------------------------------------------------------------------------

    \287\ 12 U.S.C. 5514(b)(2).
---------------------------------------------------------------------------

    A consumer advocate commenter stated that the Bureau should 
eliminate the exception described at proposed Sec.  1092.201(o)(4) and 
instead require written statements from all entities that otherwise 
would qualify as ``supervised registered entities.'' The commenter 
stated that the Bureau had not explained why the written-statement 
requirements should not be as expansive as the Bureau's supervisory 
authority, that smaller companies were likely to present risks to 
consumers, and that they were less likely to have sophisticated 
internal controls.
    Commenters stated that the proposal was insufficiently clear with 
respect to the obligations of affiliates of insured depository 
institutions and insured credit unions to comply with the proposed 
rule's written-statement requirements. Industry commenters stated that 
such affiliates should not be required to comply with such 
requirements, and an industry commenter requested that the text of the

[[Page 56081]]

final rule include an express exception for affiliates subject to 
Bureau supervision under CFPA section 1025(a).\288\ A consumer advocate 
commenter stated that the rule should clearly include banks and bank 
affiliates, including holding companies and the nonbank subsidiaries of 
bank holding companies, and that the Bureau should take as expansive of 
a view as possible of the registry's reach.
---------------------------------------------------------------------------

    \288\ 12 U.S.C. 5515(a).
---------------------------------------------------------------------------

Response to Comments Received
    The Bureau declines to extend the written statement requirement to 
service providers that are subject to Bureau examination and 
supervision solely in their capacity as service providers and that are 
not otherwise subject to Bureau supervision and examination.\289\ The 
Bureau also declines to extend the rule's requirements, including the 
written statement requirement, to service providers that do not qualify 
as ``covered persons'' under CFPA section 1002(6). The Bureau finalizes 
its preliminary conclusion in the notice of proposed rulemaking \290\ 
that, at least in the first instance, the requirements of the rule are 
best directed at covered persons, and the written-statement 
requirements set forth in Sec.  1092.204 are best directed at persons 
described in CFPA section 1024(a). The Bureau currently believes that 
it likely can achieve the anticipated benefits detailed in the 
description of the proposed rule above without extending the final 
rule's coverage to service providers per se.\291\ The Bureau notes that 
the scope of the final rule would also need to be modified 
significantly from the proposed rule in order to require service 
providers that do not qualify as ``covered persons'' to register with 
the nonbank registry and file written statements. Among other things, 
many of the service providers subject to the Bureau's jurisdiction are 
not ``covered persons'' as defined by CFPA section 1002(6), and 
therefore would be neither ``covered nonbanks'' as defined by Sec.  
1092.201(d) nor ``supervised registered entities'' as defined by Sec.  
1092.201(q). Further, the Bureau is likely to obtain information 
regarding service providers from the information that will be collected 
under the final rule as well as its supervisory reviews of supervised 
registered entities. To the extent the Bureau becomes aware of service 
providers that may present risk to consumers, it may obtain additional 
information under its existing statutory authorities, including its 
supervisory authorities with respect to service providers that are 
subject to the Bureau's supervisory and examination authority under the 
CFPA.\292\
---------------------------------------------------------------------------

    \289\ 12 U.S.C. 5481(26) defines the term ``service provider'' 
for the purposes of the CFPA.
    \290\ 88 FR 6088 at 6115.
    \291\ As discussed above, entities that are service providers 
may nevertheless also be covered persons under the CFPA. For 
example, a service provider that acts as a service provider to its 
covered person affiliate would itself be deemed to be a covered 
person as provided in 12 U.S.C. 5481(6)(B), and thus would qualify 
as a ``covered nonbank'' under Sec.  1092.201(d) if the other 
criteria of that definition are satisfied.
    \292\ See 12 U.S.C. 5514(e), 5515(d), 5516(e).
---------------------------------------------------------------------------

    The Bureau is adopting a revision to proposed Sec.  1092.201(q)(4), 
which will exclude from the rule's definition of ``supervised 
registered entity,'' and thus from the rule's written-statement 
requirements under Sec.  1092.204, persons with less than $5 million in 
annual receipts resulting from offering or providing all consumer 
financial products and services described in 12 U.S.C. 5514(a). This 
revised $5 million amount described at Sec.  1092.201(q)(4) represents 
an increase from the $1 million annual receipts amount for this 
exclusion that was described in the proposed rule. The Bureau concludes 
that increasing the amount of the exclusion, while still imposing the 
written-statement requirements described at Sec.  1092.204 on 
supervised registered entities with $5 million or more in annual 
receipts as described, will allow the Bureau to achieve the objectives 
of the written-statement requirements while reducing burden on smaller 
entities.
    The Bureau declines to adopt the consumer advocate commenter's 
suggestion to eliminate the Sec.  1092.201(q)(4) exception entirely 
from the definition of ``supervised registered entity.'' As described 
above and in the notice of proposed rulemaking,\293\ providers of 
consumer financial products and services with significantly lower 
levels of receipts generally pose lower risks overall because they 
engage with fewer consumers, obtain less money from those consumers, or 
both. And the information-collection burdens on entities with 
applicable annual receipts of less than $5 million, on a relative 
basis, generally would be higher than for larger entities. In addition, 
imposing the annual written-statement requirements on such smaller 
entities would impose additional administrative costs on the Bureau. 
The Bureau believes that applying the written-statement requirements to 
``supervised registered entities'' as defined at Sec.  1092.201(q) will 
strike the appropriate balance in terms of obtaining information that 
is useful to the Bureau without imposing undue burdens on either 
industry or the Bureau. However, for the reasons stated in the 
description of the proposal above and the section-by-section discussion 
of Sec.  1092.201(d) above, the final rule does not exclude such 
smaller entities from the information-collection requirements provided 
in Sec.  1092.202.
---------------------------------------------------------------------------

    \293\ 88 FR 6088 at 6116.
---------------------------------------------------------------------------

    As described above and in the notice of proposed rulemaking,\294\ 
the Bureau had proposed the Sec.  1092.201(o) exclusion from the 
definition of ``supervised registered entity'' based on volume of 
applicable annual receipts precisely because such an exclusion would 
also be consistent with the CFPA's requirement that the Bureau take 
entity size into account as part of its risk-based supervision program 
under CFPA 1024(b)(2).\295\ The $5 million annual receipts amount for 
the exclusion adopted in the final rule will likewise be consistent 
with this CFPA requirement.
---------------------------------------------------------------------------

    \294\ 88 FR 6088 at 6116.
    \295\ See 12 U.S.C. 5514(b)(2)(A), (B) (requiring the Bureau to 
take into consideration ``the asset size of the covered person'' and 
``the volume of transactions involving consumer financial products 
or services in which the covered person engages''). Furthermore, 
while the Bureau does not believe that it needs to rely on its 
authority under 12 U.S.C. 5512(b)(3) to exempt classes of covered 
persons from rules in proposing this small-entity exclusion, the 
Bureau believes that the exclusion would be warranted as an exercise 
of its section 1022(b)(3) exemption authority, to the extent that 
provision is applicable. See 12 U.S.C. 5512(b)(3). As under 12 
U.S.C. 5514(b)(2), an entity-size-based exclusion accords with 12 
U.S.C. 5512(b)(3)(B)(i) and (ii), which instruct the Bureau to 
consider ``the total assets of the class of covered persons'' and 
``the volume of transactions . . . in which the class of covered 
persons engage'' in issuing exemptions. 12 U.S.C. 5512(b)(3)(B)(i)-
(ii). In addition, given the relatively smaller scope of the harm to 
consumers that entities with annual receipts not exceeding $5 
million would generally be able to cause when compared with entities 
with annual receipts exceeding that threshold, the Bureau does not 
believe that on balance the factor articulated in 12 U.S.C. 
5512(b)(3)(B)(iii) (``existing provisions of law which are 
applicable to the consumer financial product or service and the 
extent to which such provisions provide consumers with adequate 
protection'') weighs against adopting the proposed small-entity 
exclusion.
---------------------------------------------------------------------------

    With respect to the industry commenters' specific concerns 
regarding burden on mortgage lenders and mortgage servicers, the Bureau 
further notes that, under the final rule, such supervised registered 
entities will no longer be required to file written statements with 
respect to NMLS-published covered orders as defined at Sec.  
1092.201(k) if they elect the one-time registration option set forth in 
Sec.  1092.203. In addition to the change being adopted to Sec.  
1092.201(q)(4), Sec.  1092.203 will further reduce, perhaps 
substantially, the number of mortgage lenders and mortgage servicers 
that will

[[Page 56082]]

be required to comply with the rule's written-statement requirements.
    See below for discussion of the application of Sec.  1092.201(q) to 
affiliates of insured depository institutions and insured credit 
unions.
Final Rule
    For the reasons set forth above and below, the Bureau is finalizing 
Sec.  1092.201(o) (renumbered as Sec.  1091.201(q)) as proposed, with 
minor technical edits and a clarification described below regarding the 
application of this section to affiliates of an insured depository 
institution or insured credit union with total assets of more than 
$10,000,000,000 ($10 billion), as well as a revision to clarify how 
annual receipts are calculated under Sec.  1091.201(q)(4).
    In response to comments, the Bureau clarifies the application of 
Sec.  1092.201(q)'s definition of ``supervised registered entity'' to 
affiliates of insured depository institutions and insured credit 
unions. The final rule defines the term ``supervised registered 
entity'' as ``a registered entity that is subject to supervision and 
examination by the Bureau pursuant to 12 U.S.C. 5514(a)'' (subject to 
certain exceptions). CFPA section 1024(a)--which is codified as 12 
U.S.C. 5514(a)--encompasses section 1024(a)(3)(A), which provides that 
``[t]his section shall not apply to persons described'' in section 
1025(a) or 1026(a).\296\ Section 1025(a) grants the Bureau supervisory 
authority over insured depository institutions and insured credit 
unions with more than $10 billion in total assets, as well as ``any 
affiliate thereof.'' \297\ Therefore, because affiliates of such very 
large insured depository institutions and insured credit unions are 
included within the scope of section 1025(a), and thus are excluded 
from the scope of section 1024(a) via section 1024(a)(3)(A), affiliates 
of insured depository institutions and insured credit unions with more 
than $10 billion in total assets do not qualify as ``supervised 
registered entities'' under the final rule. That is the case even if 
the affiliate offers or provides consumer financial products and 
services described in CFPA section 1024(a)(1). For example, a bank 
holding company, savings and loan holding company, or subsidiary of a 
bank or savings association that is an affiliate of an insured 
depository institution or insured credit union with total assets of 
more than $10 billion is not covered by the definition of ``supervised 
registered entity,'' even if it offers or provides consumer financial 
products or services described in CFPA section 1024(a)(1), such as 
mortgage lending. Such an affiliate is not subject to the final rule's 
written-statement requirements even if it is a ``covered nonbank.'' 
\298\
---------------------------------------------------------------------------

    \296\ 12 U.S.C. 5514(a)(3)(A).
    \297\ 12 U.S.C. 5515(a).
    \298\ Such an affiliate would still be subject to the final 
rule's other requirements applicable to covered nonbanks, including 
Sec.  1092.202's requirements to register covered orders. See the 
section-by-section discussion of Sec.  1092.201(d) above.
---------------------------------------------------------------------------

    By contrast, CFPA section 1026(a), which addresses Bureau authority 
over insured depository institutions and insured credit unions with $10 
billion or less in total assets, makes no mention of ``affiliates'' of 
such entities. Section 1024(a)(3)(A) thus does not exclude affiliates 
of insured depository institutions and insured credit unions with $10 
billion or less in total assets from the scope of section 1024(a). As a 
result, affiliates of such entities may qualify as ``supervised 
registered entities,'' unless an exception set forth in Sec.  
1092.201(q)(1) through (4) applies. With the above clarification of how 
the interlocking texts of Sec.  1092.201(q) and CFPA sections 1024(a), 
1025(a), and 1026(a) operate with respect to affiliates of insured 
depository institutions and insured credit unions, the Bureau concludes 
that no revisions to the text of Sec.  1092.201(q) are required to 
address this issue.
    The Bureau is finalizing this approach to affiliates of insured 
depository institutions and insured credit unions for several reasons. 
First, the Bureau is issuing the final rule in part based on its 
authority under CFPA section 1024(b)(7)(A)-(C). As explained above, 
CFPA section 1024(a)(3)(A) provides that CFPA section 1024 shall not 
apply to persons described in CFPA section 1025(a), including 
affiliates of insured depository institutions or insured credit unions 
with more than $10 billion in assets. Therefore, excluding such 
affiliates from the definition of ``supervised registered entity'' will 
help ensure that the written statement provisions of the final rule are 
consistent with the scope of CFPA section 1024. Second, while the 
Bureau might at some point consider collecting information from covered 
persons other than those described at CFPA section 1024(a), the Bureau 
believes that there is currently greater need to collect this 
information from such persons. The Bureau acknowledges the consumer 
advocate commenter's concerns regarding risks that may be posed to 
consumers by affiliates of insured depository institutions and insured 
credit unions, including affiliates of insured depository institutions 
and insured credit unions with total assets of more than $10 billion. 
These affiliate entities remain subject to the Bureau's supervisory and 
examination authority under CFPA section 1025, as well as other 
applicable Bureau authorities, and the Bureau may choose to utilize its 
supervisory and other authorities in monitoring and assessing such 
risks. Third, the Bureau concludes that exempting the affiliates of 
such very large insured depository institutions and insured credit 
unions from the final rule's written-statement requirements is 
consistent with its rationale for exempting insured depository 
institutions and insured credit unions from the scope of subpart B at 
this time.
    The Bureau has also added to the final rule the new Sec.  
1092.201(q)(4)(ii). That provision clarifies that a person's receipts 
from offering or providing a consumer financial product or service 
subject to a larger participant rule under CFPA section 1024(a)(1)(B) 
count as receipts for purposes of the $5 million exclusion in Sec.  
1092.201(q)(4), regardless of whether the person qualifies as a larger 
participant. As described in the proposal, under Sec.  1092.201(q)(4), 
the exclusion is based on the receipts resulting from offering or 
providing all consumer financial products and services described in 
CFPA section 1024(a). The new provision makes clear that such receipts 
include the receipts resulting from offering or providing any of the 
consumer financial products and services subject to a rule defining 
larger participant covered persons issued under CFPA section 
1024(a)(1)(C) and (2), which for purposes of this exclusion are 
consumer financial products and services described in CFPA section 
1024(a). For purposes of this exclusion, receipts that count toward 
determining larger participant status under a larger participant rule 
would count toward this exclusion, even if the person ultimately did 
not qualify as a larger participant. For example, a person may engage 
in offering or providing both consumer mortgages, private student 
loans, or payday loans, on the one hand, and consumer financial 
products or services identified in a larger participant rule, on the 
other hand. In that example, even if the person did not meet the 
threshold for larger participant status under the applicable larger 
participant rule, the receipts from offering or providing the consumer 
financial product or service covered by the larger participant rule 
still would count as receipts for purposes of this exclusion.

[[Page 56083]]

Section 1092.202 Registration and Submission of Information Regarding 
Covered Orders

    Proposed Sec.  1092.202 would have required covered nonbanks to 
register with the NBR system by timely submitting information to the 
NBR system regarding covered orders. The proposed section would have 
established requirements regarding the timing and content of 
information to be submitted.
    The Bureau believed that requiring covered nonbanks to register 
with the NBR system would further the objectives of proposed subpart B 
even in the event the Bureau were not to finalize proposed requirements 
that supervised registered entities submit written statements as 
described in proposed Sec.  1092.203. Proposed Sec.  1092.202 would 
have applied to a broader set of entities than would proposed Sec.  
1092.203, and the Bureau believed that requiring registration of 
entities under proposed Sec.  1092.202 would have provided independent 
benefit to the Bureau and to consumers.
    The Bureau is finalizing Sec.  1092.202 largely as proposed, with 
certain changes discussed in the analysis of particular paragraphs 
below. Below, the Bureau first addresses comments regarding the 
Bureau's legal authority to impose the requirements in Sec.  1092.202 
and then discusses Sec.  1092.202's individual paragraphs.
Certain Comments Received Regarding the Bureau's Authority Under CFPA 
Section 1022 To Impose the Requirements in the Final Rule
    Some commenters expressed the view that the Bureau is pursuing a 
novel and legally impermissible approach to its authorities under CFPA 
section 1022. Other commenters stated that the Bureau has statutory 
authority to issue the proposed rule under section 1022. The Bureau 
finalizes its conclusion that section 1022 authorizes the rule's 
registration and publication requirements. The Bureau discusses and 
responds to some of these comments together in this part for ease of 
reference. For further discussion of the market-monitoring requirements 
in the final rule and the Bureau's responses to comments received, see 
the section-by-section analysis below.
    Commenters stated that the proposed registry was inconsistent with 
the Bureau's past practices, and that the Bureau's purported invocation 
of its CFPA section 1022(c) authority was actually for the purpose of 
using it to expand its supervisory authority over market participants 
under CFPA section 1024(a)(1)(C). An industry commenter argued that the 
proposal represented an attempt to eliminate a clear statutory firewall 
between the Bureau's market-monitoring authority and its enforcement 
function, and that it improperly relied upon the Bureau's authority 
under CFPA section 1022 to support its enforcement functions. The 
industry commenter stated that the CFPA distinguished the Bureau's 
enforcement powers under subtitle E of the CFPA from its market-
monitoring authority under CFPA section 1022, and that unlike 
information gathered under CFPA 1022, information collected for 
enforcement purposes is subject to procedural safeguards under CFPA 
section 1052 and contemplates the use of civil investigative demands 
(CIDs) to determine whether there has been a violation of a law.
    An industry commenter stated that the proposal did not provide any 
evidence that covered orders are probative of risk to consumers, 
stating that the proposal's statements about such risk were conclusory 
and not backed by documented research and facts, and that companies 
might actually present less risk because of the scrutiny that comes 
with being subject to an order. The industry commenter further stated 
that the proposal would effectively put covered nonbanks in a permanent 
penalty box, and that the proposal's premise that past violations are 
evidence of current risk of harm contravenes a fundamental rule of 
evidence under American law as established at Federal Rule of Evidence 
404, which prohibits certain use of evidence of prior crimes.
    A joint comment letter from State regulators stated that the 
proposal did not quantify the potential benefit to the Bureau's 
consumer education efforts, and suggested that the Bureau's belief that 
most consumers will not change their behavior due to the publication of 
the registry was inconsistent with the existence of such a benefit.
The Bureau's Response to Certain Comments Received Regarding the 
Bureau's Authority Under CFPA Section 1022 To Impose the Requirements 
in the Final Rule
    The Bureau proposed to rely, in part, on its authorities in 
sections 1022(c)(1)-(4) and (7) for the collection and publication of 
applicable orders. As the Bureau stated in the notice of proposed 
rulemaking, the Bureau considers violations of consumer protection laws 
probative of ``risks to consumers in the offering and provision of 
consumer financial products or services,'' and that entities subject to 
public orders ``may pose heightened and ongoing risks to consumers in 
the markets for those products and services.'' \299\ More specifically, 
monitoring for such orders would allow the Bureau ``to track specific 
instances of, and more general developments regarding, potential 
corporate recidivism,'' which poses its own unique risks to consumers, 
and would improve the Bureau's ability to track enforcement trends by 
other regulators, enabling it to more efficiently deploy resources vis-
[agrave]-vis other regulators.\300\ Parts III(B) and IV(A)-(C) above 
discuss in detail how this information will support the allocation of 
resources and detection of risks to consumers.
---------------------------------------------------------------------------

    \299\ 88 FR 6088 at 6091-6092.
    \300\ Id. at 6092.
---------------------------------------------------------------------------

    Some commenters argued for a narrower interpretation of section 
1022(c)(4), contending that the Bureau's market-monitoring authorities 
cannot be used to impose a substantive requirement or are limited to 
gathering information about particular products, services and 
practices, or to one-off information gathering. In the view of some 
commenters, by requiring entities to provide information to the Bureau 
on an ongoing basis, the registry is inconsistent with past Bureau 
practice. One commenter pointed to section 1071 to argue that, had 
Congress wanted the Bureau to create a new database, it would have 
explicitly and clearly done so.
    The narrow view of market-monitoring urged by these commenters is 
inconsistent with the text and structure of section 1022. First, 
contrary to commenters' suggestion that the Bureau's market-monitoring 
authority is limited to gathering information about particular 
products, services, and practices, nothing in CFPA section 1022(c) 
confines the Bureau to exercising its market-monitoring authority only 
on a piecemeal, product-by-product or service-by-service basis. In 
fact, section 1022 specifically commands the Bureau to monitor 
``developments in markets for . . . products or services,'' not simply 
developments regarding particular products or services themselves.\301\ 
Further, section 1022(c)(4)(A) explicitly authorizes the Bureau to 
gather information ``regarding the organization, business conduct, 
markets, and activities of covered persons and service providers.'' 
Commenters rest their argument on the language of section 1022(c)(2), 
which contains an open-ended list of factors that the Bureau ``may 
consider, among other factors,''

[[Page 56084]]

when ``allocating its resources to perform . . . monitoring.'' \302\ 
Although these discretionary considerations are identified by reference 
to ``consumer financial products or services,'' this language does not 
function as a procedural requirement for the Bureau to proceed on a 
product-by-product, service-by-service, or even market-by-market basis 
when it uses its market-monitoring authority.
---------------------------------------------------------------------------

    \301\ 12 U.S.C. 5512(c)(1) (emphasis added).
    \302\ 12 U.S.C. 5512(c)(2).
---------------------------------------------------------------------------

    One commenter argues that the rule exceeds the Bureau's authority 
under section 1022(c)(4)(A) to gather information ``from time to 
time.'' The Bureau, however, is acting in accord with its statutory 
authority to ``prescribe by rule'' that covered persons must ``from 
time to time'' file ``annual or special reports.'' \303\ The rule here 
does exactly that: It requires reports ``from time to time''--i.e., 
ninety days after a covered order's effective date (or the applicable 
nonbank registry implementation date), as well as ninety days after the 
covered order's amendment, modification, termination, abrogation, or 
cessation of covered-order status, or after changes to other 
registration information. There are indications elsewhere in the CFPA 
that ``from time to time'' may include regular intervals. For example, 
section 1014, which establishes the Bureau's Consumer Advisory Board, 
directs the Board to meet ``from time to time . . . but, at a minimum, 
. . . at least twice in each year.'' \304\ In addition, in other 
statutory contexts, courts have recognized that the phrase ``from time 
to time'' contemplates ``an ongoing process'' rather than a one-off 
action.\305\ In section 1022, Congress imposed on the Bureau an 
obligation to monitor markets; as a practical matter, doing so often 
requires repeated or periodic information collections in order to 
understand how the consumer financial marketplace is developing. An 
atextual reading of section 1022(c)(4) that would limit the Bureau to 
one-off information gathering efforts would significantly undermine the 
Bureau's ability to fulfill its congressionally assigned obligations 
and runs counter to the notion of market monitoring ``by rule'' under 
the statute.\306\
---------------------------------------------------------------------------

    \303\ 12 U.S.C. 5512(c)(4).
    \304\ 12 U.S.C 5494(c).
    \305\ In re A Community Voice, 878 F.3d 779, 784 (9th Cir. 
2017); see also Earth Island Institute v. Wheeler, 464 F. Supp. 3d 
1138, 1145 (N.D. Cal. 2020) (concluding that ``from time to time'' 
statutory language reflected an ``ongoing duty'').
    \306\ 12 U.S.C. 5512(c)(4)(B)(ii).
---------------------------------------------------------------------------

    Contrary to commenters' suggestion, this is not the first time that 
the Bureau has relied on section 1022(c)(4) to create an ongoing 
requirement for covered persons to submit information for the purposes 
of carrying out market monitoring. For example, as part of its final 
rule to extend consumer protections over prepaid accounts under 
Regulation E, which implements the Electronic Fund Transfer Act, and 
Regulation Z, which implements the Truth in Lending Act, the Bureau 
also utilized its authority under CFPA section 1022(c)(4) to require 
prepaid card issuers to submit prepaid account agreements to the 
Bureau.\307\ The Bureau initially proposed requiring prepaid card 
issuers to submit new and amended agreements to the Bureau on a 
quarterly basis for posting on a website maintained by the Bureau.\308\ 
In the final rule, the Bureau ultimately chose to require submission on 
a rolling basis to reduce compliance burden.\309\ Requiring ongoing 
submissions in this final rule is not a novel or unique interpretation 
of the Bureau's authority under section 1022(c)(4).
---------------------------------------------------------------------------

    \307\ Prepaid Accounts Under the Electronic Fund Transfer Act 
(Regulation E) and the Truth in Lending Act (Regulation Z), 81 FR 
83934 (Nov. 22, 2016).
    \308\ Id. at 83957.
    \309\ Id. at 83963.
---------------------------------------------------------------------------

    Commenters appear to be relying on the expressio unius est exclusio 
alterius canon of statutory interpretation in claiming that the data 
collection authorized by section 1071 of the CFPA, which amended the 
Equal Credit Opportunity Act (ECOA),\310\ implies limitations on the 
Bureau's market-monitoring authority in section 1022 of the CFPA. But 
the Supreme Court has ``long held that the expressio unius canon does 
not apply `unless it is fair to suppose that Congress considered the 
unnamed possibility and meant to say no to it.' '' \311\ Courts have 
observed that the canon is a ``feeble helper in an administrative 
setting,'' where Congress often employs expansive statutory language to 
leave room for exercises of reasonable agency discretion, and is a 
``poor indicator'' of congressional intent ``when countervailed by a 
broad grant of authority contained within the same statutory scheme.'' 
\312\
---------------------------------------------------------------------------

    \310\ 15 U.S.C. 1691 et seq.
    \311\ Marx v. General Rev. Corp., 568 U.S. 371, 381 (2013) 
(quoting Barnhardt v. Peabody Coal Co., 537 U.S. 149 (2003)).
    \312\ Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692, 697 (D.C. 
Cir. 2014) (quoting Cheney R.R. Co. v. I.C.C., 902 F.2d 66, 68-69 
(D.C. Cir. 1990)).
---------------------------------------------------------------------------

    Commenters do not point to anything in the legislative history of 
the CFPA to support their claim that Congress ``meant to say no'' to 
requirements like those contemplated by this rule. Indeed, the 
authority to collect information in section 1022(c)(4) is precisely the 
kind of broad authority with respect to which courts have found the 
expressio unius canon to be a ``poor indicator'' of congressional 
intent. The Bureau has an extensive obligation, covering the entire 
marketplace for consumer financial products and services, to monitor 
for risks to consumers; the information-collection authority at section 
1022(c)(4) is necessarily broad in order to satisfy that obligation.
    In addition, interpreting section 1071 to imply some limit on the 
authorities in section 1022 is inappropriate because, among other 
reasons, section 1071 amends another statute, ECOA, and serves purposes 
specific to that statute, which are to ``facilitate enforcement of fair 
lending laws'' and to ``enable communities, governmental entities, and 
creditors to identify business and community development needs and 
opportunities of women-owned, minority-owned, and small businesses.'' 
\313\ Sections 1022 and 1071 should be interpreted in light of their 
distinct and specified purposes.
---------------------------------------------------------------------------

    \313\ 15 U.S.C. 1691c-2(a).
---------------------------------------------------------------------------

    Regarding the industry commenters' statements that the final rule 
improperly relies upon section 1022 authority to support the Bureau's 
determinations under CFPA section 1024(a)(1)(C), or to support the 
Bureau's enforcement functions, CFPA section 1022(a)(1) provides that 
the CFPB may use its market-monitoring authority to ``support its 
rulemaking and other functions.'' \314\ The Bureau understands this 
provision to mean that all of the Bureau's functions, including 
supervision and enforcement, can be informed by information it gathers 
through market monitoring. While the Bureau's market-monitoring 
authority does not replace its supervision and enforcement authorities 
(which are established by and subject to other provisions of the CFPA), 
there is no question that the Bureau can use its market-monitoring work 
to generally ``support'' those functions as well as its other 
functions, such as rulemaking and conducting financial education 
programs.\315\
---------------------------------------------------------------------------

    \314\ See 12 U.S.C. 5512(c)(1).
    \315\ See part IV(B) above.
---------------------------------------------------------------------------

    The Bureau is finalizing its preliminary conclusion in the proposal 
that collecting and registering public agency and court orders imposing 
obligations based upon violations of consumer law would assist with 
monitoring for risks to consumers in the offering or provision of 
consumer financial products and services. As explained in part IV 
above, when an agency issues such an order, or seeks a court order, it 
typically has determined

[[Page 56085]]

that the problems at the applicable entity are sufficiently serious to 
merit the expenditure of that agency's limited resources and perhaps 
the attention of the courts. As discussed in part IV, conduct that 
constitutes a violation of a covered law may also indicate that the 
covered nonbank has engaged in violations of laws that the Bureau 
administers. And, notwithstanding the issuance of the covered order, 
the violations of covered law or other problems that led the agency to 
pursue enforcement action may persist after an order has been issued. 
Such orders may also be indicative of the existence of broader problems 
at the entity that pose related risks to consumers--including lack of 
sufficient controls related to the offering and provision of consumer 
financial products and services, inadequate compliance management 
systems and processes, and an unwillingness or inability of senior 
management to comply with laws subject to the Bureau's jurisdiction.
    Information regarding the absence of covered orders will also be 
informative to the Bureau. The existence of covered orders may also in 
some cases be indicative of lesser, and not greater, risk to consumers. 
For example, the presence of enforcement activity may indicate that 
particular risks, markets, or companies are receiving adequate 
enforcement attention and oversight from regulators.\316\ But while 
less enforcement activity in certain areas could indicate less risk to 
consumers, it potentially also could be evidence of less attention by 
regulators and a need to increase monitoring and other supervisory or 
regulatory activities. Enforcement patterns and trends may vary 
depending on any number of factors, including the agency issuing or 
obtaining the order, the type of entity subject to the order, the 
consumer protection law being enforced, the applicable geographic or 
product market, and other variables. The Bureau will use the 
information it collects under the final rule to evaluate, assess, and 
understand the consumer risk posed by or otherwise related to covered 
orders, including patterns in such orders and developments in the 
markets for consumer financial products and services.
---------------------------------------------------------------------------

    \316\ See 12 U.S.C. 5514(b)(2)(D) (requiring the Bureau to 
consider in conducting risk-based supervisory prioritization ``the 
extent to which [nonbanks] are subject to oversight by State 
authorities for consumer protection'').
---------------------------------------------------------------------------

    As discussed in part IV above, collecting and evaluating such 
market-monitoring information relevant to the offering and provision of 
consumer financial products and services is appropriate to inform the 
Bureau's functions, including its supervision and enforcement 
functions. Thus, the Bureau may consider all of this information 
regarding enforcement activity, including patterns in such activity, in 
assessing risks to consumers as part of, among other things, exercising 
its market-monitoring authority under CFPA section 1022(c), conducting 
its supervisory prioritization under CFPA section 1024(b)(2), and 
determining the amount of civil money penalties it may seek or assess 
under CFPA section 1055(c). However, such use by the Bureau of this 
information as authorized under the CFPA does not represent an attempt 
to improperly penalize covered nonbanks for prior acts. Likewise, as 
discussed in the section-by-section discussion of Sec.  1092.205(a) 
below, any publication by the Bureau of the information collected 
through the registry as authorized under Sec.  1092.205 would not be 
intended to punish companies or individuals for their past acts. 
Collection and publication of such information as provided in the final 
rule is authorized by the CFPA and does not violate evidentiary or 
other fundamental principles of American law.
    Industry commenters also stated that the proposed registry's 
purpose was incompatible with the Bureau's authorities to prescribe 
rules regarding registration requirements under CFPA section 
1022(c)(7). A joint letter from members of Congress stated CFPA section 
1022(c)(7) does not grant the Bureau authority to establish such a 
robust set of registration requirements, nor a database for a 
particular category of information, and stated that when Congress 
intends to create a database, it explicitly and clearly does so. One 
industry commenter also stated that CFPA section 1022(c)(7) does not 
contemplate the creation of a registration requirement and bespoke 
database for a particular category of information, but rather outlines 
a path for registering a covered entity with the Bureau and sharing 
basic identifying information about the entity with the public. Another 
industry commenter stated that the proposed registry represented an 
attempt to obscure the Bureau's failure to create a registry that would 
identify legitimate companies for the use of consumers and others, as 
required by law, and that the Bureau should instead develop and 
publicize an accessible list of legitimate debt collectors.
    Commenters do not specify how the final rule's particular 
registration requirements exceed the authority contained in CFPA 
section 1022(c)(7), and the Bureau believes that the final rule is 
consistent with the Bureau's authority under that provision. As 
discussed in part III(B) above, CFPA section 1022(c)(7)(A) expressly 
authorizes the Bureau to ``prescribe rules regarding registration 
requirements applicable to a covered person, other than an insured 
depository institution, insured credit union, or related person.'' The 
registry will provide a mechanism for the Bureau to gather information 
about the nonbank entities that are subject to its jurisdiction. The 
CFPB has designed its rule to be consistent with limitations contained 
in CFPA section 1022(c)(7)(A), including by excluding insured 
depository institutions, insured credit unions, and related persons 
from the scope of the rule's registration requirements.\317\ As 
explained in more detail in parts III and IV, the Bureau is adopting 
the final rule to fulfill the general purposes and objectives 
established for the Bureau in CFPA sections 1021, 1022(b) and (c), and 
1024(b)(7)(A)-(C), as authorized under those sections. The Bureau 
disagrees that more specific statutory authorization is required.
---------------------------------------------------------------------------

    \317\ See Sec.  1092.201(d)(1) and (2) of the final rule.
---------------------------------------------------------------------------

    Section 1022(c)(7)(B) also provides that ``[s]ubject to rules 
prescribed by the Bureau, the Bureau may publicly disclose registration 
information to facilitate the ability of consumers to identify covered 
persons that are registered with the Bureau.'' \318\ The Bureau 
interprets CFPA section 1022(c)(7)(B) as authorizing it to publish 
registration information required by Bureau rule under CFPA section 
1022(c)(7)(A) so that consumers may identify the nonbank covered 
persons on which the Bureau has imposed registration requirements. 
Contrary to a commenter's suggestion, this provision does not imply 
that the Bureau is precluded from publishing registration information 
in database or other searchable form, or from publishing identifying 
information or other registration information in a manner that 
highlights specific information or categories of information. As 
further explained in part IV(F) and the section-by-section discussion 
of Sec.  1092.205(a), publication of registry information under Sec.  
1092.205 in an online public registry will implement the provisions of 
Federal consumer financial law in a manner fully consistent with the 
Bureau's obligations under the CFPA.
---------------------------------------------------------------------------

    \318\ 12 U.S.C. 5512(c)(7)(B).
---------------------------------------------------------------------------

    An industry commenter questioned the Bureau's authority to make the 
market-monitoring data public under

[[Page 56086]]

CFPA section 1022(c)(3). Section 1022(c)(3)(B), however, authorizes the 
Bureau to release information through aggregated reports or ``other 
appropriate formats.'' The only limitations on ``format'' that section 
1022 imposes are that the format be ``appropriate'' and that it be 
``designed to protect confidential information in accordance with 
paragraphs (4), (6), (8), and (9).'' The proposed registry complies 
with these restrictions.
    Section 1022(c)(3)(B) is not limited by section 1022(c)(3)(A), on 
which the industry commenter focused. Section 1022(c)(3)(A) requires 
the Bureau to, at minimum, publish one ``report of significant findings 
of its monitoring required by this subsection [i.e., subsection 
1022(c)] in each calendar year.'' It sets a floor, not a ceiling, and 
it does not restrict the Bureau to only publishing ``report[s] of 
significant findings'' related to its market-monitoring work.
    In addition, section 1022(c)(3)(B) authorizes the Bureau to publish 
information obtained ``under this section [i.e., section 1022]'' in 
``appropriate formats.'' By its own terms, this provision applies to 
any category of information collected under section 1022 (see, e.g., 
CFPA sections 1022(c)(6)(C), 1022(c)(7), 1022(d)), and so cannot 
reasonably be limited by section 1022(c)(3)(A), which only concerns the 
Bureau's ``monitoring'' work under ``subsection'' (c).
    The commenter's assertion is also in tension with laws requiring 
Federal agencies to make data and information available to the public. 
The Foundations for Evidence-Based Policymaking Act requires agencies 
to disclose data if it would otherwise be made available under the 
Freedom of Information Act.\319\ Similarly, the Freedom of Information 
Act imposes proactive disclosure requirements when records are likely 
to be requested by the public.\320\
---------------------------------------------------------------------------

    \319\ 44 U.S.C. 3504(b)(6)(F).
    \320\ 5 U.S.C. 552(a)(2)(D).
---------------------------------------------------------------------------

    As discussed in part IV(B) above, the information collected under 
the final rule will inform the Bureau's exercise of its consumer 
education functions, among other functions.\321\ For example, the 
Bureau may consider the information it has collected in determining 
what harmful practices may be prevalent in the markets for consumer 
financial products and services, in monitoring and assessing the 
enforcement actions that are being issued in connection with such 
harmful practices and the content of covered orders, and in identifying 
patterns of similar alleged or found violations of Federal consumer 
financial law across multiple nonbank covered persons. Such information 
about risk to consumers in the offering and provision of consumer 
financial products and services will help the Bureau determine how to 
conduct its own consumer education efforts. The Bureau may choose to 
direct its consumer education efforts toward educating consumers about 
risks identified via the registry, and can help consumers understand 
the risks and associated costs of such conduct with respect to their 
use of certain consumer financial products or services. While, as 
discussed in parts VIII and IX below, the Bureau believes that most 
consumers will not change their behavior due to the publication of the 
registry as authorized under Sec.  1092.205(a), the Bureau will be able 
to utilize the information collected under the final rule to inform its 
own consumer education functions.
---------------------------------------------------------------------------

    \321\ See 12 U.S.C. 5493(d) (establishing the Bureau's Office of 
Financial Education); 12 U.S.C. 5511(b)(1) (``The Bureau is 
authorized to exercise its authorities under Federal consumer 
financial law for the purposes of ensuring that, with respect to 
consumer financial products and services . . . consumers are 
provided with timely and understandable information to make 
responsible decisions about financial transactions''); 12 U.S.C. 
5511(c)(1) (``The primary functions of the Bureau are . . . 
conducting financial education programs'').
---------------------------------------------------------------------------

Section 1092.202(a) Scope of Registration Requirement
Proposed Rule
    Proposed Sec.  1092.202(a) would have defined the scope of the 
registration requirement. To maximize the value of subpart B's 
registration requirements, while taking into consideration 
administrative costs to the Bureau and covered nonbanks in keeping the 
registry updated, the Bureau proposed to limit Sec.  1092.202 to 
covered orders (as that term is defined at proposed Sec.  1092.201(e)) 
that have an effective date (as that term is defined at proposed Sec.  
1092.201(f)) on or after the effective date of subpart B, or that 
remain in effect (as that term is defined at proposed Sec.  
1092.201(m)) as of the effective date of subpart B. The Bureau 
preliminarily concluded that this limitation of the registration 
requirement's scope would help ensure that the most relevant orders are 
submitted into the NBR system.\322\ The Bureau recognized in its 
proposal that there is potential value in requiring registration with 
respect to older orders that no longer remain in effect. Among other 
things, the Bureau believed that such registration would have helped 
inform the Bureau and consumers regarding older orders and help to 
identify an even larger number of repeat offenders than could be 
identified through the registration requirement as proposed in Sec.  
1092.202. On the other hand, the Bureau recognized that requiring 
covered nonbanks to identify and register older orders to which they 
were once subject, but that no longer impose any present obligations, 
may be burdensome. In addition, extending the registration requirement 
to older orders would have imposed additional administrative costs on 
the Bureau. The Bureau believed that limiting the registration 
requirement to covered orders with an effective date on or after the 
effective date of subpart B, or that remain in effect as of subpart B's 
effective date, would strike the appropriate balance in terms of 
establishing an informative and useful registry without imposing undue 
burdens on either industry or the Bureau. To maximize the value of 
subpart B's registration requirements, while taking into consideration 
administrative costs to the Bureau and covered nonbanks in keeping the 
registry updated, the Bureau therefore proposed to limit Sec.  1092.202 
to covered orders (as that term is defined at proposed Sec.  
1092.201(e)) that have an effective date (as that term is defined at 
proposed Sec.  1092.201(f)) on or after the effective date of subpart 
B, or that remain in effect (as that term is defined at proposed Sec.  
1092.201(m)) as of the effective date of subpart B.
---------------------------------------------------------------------------

    \322\ The Bureau is adopting the proposal's approach to this 
issue in the final rule and finalizes its preliminary conclusion to 
this effect; see the discussion of Sec.  1092.202(a) of the final 
rule below.
---------------------------------------------------------------------------

Comments Received and Final Rule
    The Bureau did not receive any comments specifically regarding 
proposed Sec.  1092.202(a). For the reasons set forth in the 
description of the proposed rule above, the Bureau is finalizing Sec.  
1092.202(a) as proposed.
Section 1092.202(b) Requirement To Register and Submit Information 
Regarding Covered Orders
Proposed Rule
    Proposed Sec.  1092.202(b) would have established subpart B's 
requirements for covered nonbanks to register with the NBR system and 
to provide and maintain certain registration information.
    Proposed Sec.  1092.202(b)(1) would have provided that each covered 
nonbank that is identified by name as a party subject to a covered 
order described in paragraph (a) shall register as a registered entity 
with the NBR system in accordance with proposed Sec.  1092.202(b)

[[Page 56087]]

if it is not already so registered, and shall provide or update, as 
applicable, the information described in subpart B in the form and 
manner specified by the Bureau. As discussed in connection with 
proposed Sec.  1092.201(e)(1), a covered nonbank that is identified by 
name as a party subject to the order would have been required to 
register under this paragraph even if the covered nonbank is not listed 
in the title or caption of the order, or as the primary respondent, 
defendant, or subject of the order. A covered nonbank may have been 
subject to the requirements of proposed Sec.  1092.202 even if the 
issuing agency or court does not list the covered nonbank as a party in 
related press releases or internet links.
    The Bureau considered but did not propose alternative approaches, 
including applying the requirements of this section to any covered 
nonbank alleged or found in a covered order to have violated a covered 
law, even if such party were not expressly named. This alternative 
would have captured circumstances where, for instance, a covered order 
applies to a category of entities, such as all affiliates of a 
particular named covered nonbank, but the order does not specifically 
name all of the entities that fall within that category (e.g., does not 
specifically list the names of all of the affiliates of the named 
covered nonbank). While this alternative would have potentially widened 
the scope of information the Bureau would have obtained relevant to its 
market-monitoring objectives, it preliminarily concluded that the 
proposed approach would effectively achieve those objectives with 
greater administrative ease.
    As provided at Sec.  1092.102(a), the Bureau proposed to specify 
the form and manner for electronic filings and submissions to the NBR 
system that are required or made voluntarily under part 1092, including 
Sec. Sec.  1092.202 and 1092.204. The Bureau would have issued specific 
guidance for filings and submissions.
    Proposed Sec.  1092.202(b)(2)(i) would have required each covered 
nonbank that is required to register under proposed Sec.  1092.202 to 
submit a filing containing the information described in proposed Sec.  
1092.202(c) and (d) to the NBR system within the later of 90 days after 
the applicable nonbank registration system implementation date or 90 
days after the effective date of any applicable covered order. Thus, a 
covered nonbank would not have been required under proposed subpart B 
to register any covered orders to which it may be subject until 90 days 
after the nonbank registration system implementation date for this 
provision. For covered orders with effective dates after the nonbank 
registration system implementation date, an applicable covered nonbank 
would have been required to register the covered order within 90 days 
after the covered order's effective date, as that term is defined at 
proposed Sec.  1092.201(f). The Bureau believed the 90-day period would 
give sufficient time for a covered nonbank to collect and submit the 
applicable information to the NBR system and would also generally 
permit a sufficient length of time for any relevant agency or court 
stays to take effect.
    As discussed above regarding proposed Sec.  1092.101(e), the Bureau 
estimated that the nonbank registration system implementation date for 
proposed Sec. Sec.  1092.202 and 1092.203 would have been no earlier 
than January 2024 and may be substantially later. The Bureau explained 
in its proposal that the exact nonbank registration system 
implementation date would depend upon, among other things, the comments 
received to this proposal and the Bureau's ability to launch the 
registration system.
    Proposed Sec.  1092.202(b)(2)(ii) would have required each covered 
nonbank that is required to register under proposed Sec.  1092.202 to 
submit a revised filing amending any information described in 
paragraphs (c) and (d) to the NBR system within 90 days after any 
amendments are made to the covered order or any of the information 
described in paragraphs (c) or (d) changes. The Bureau believed that 
requiring entities to maintain up-to-date information with the NBR 
system would significantly enhance the usefulness of the NBR system for 
the Bureau, consumers, and other users of the NBR system.
Comments Received
    Commenters stated that the Bureau is pursuing a novel and legally 
impermissible approach to its authorities under CFPA section 1022. For 
a discussion of these issues, see the Bureau's response above to 
comments received regarding the Bureau's authority under CFPA section 
1022.
    Commenters also stated that the proposal was not compatible with 
CFPA section 1024. Industry commenters stated that the proposed 
registry would conflict with the requirement at CFPA section 1024(b)(4) 
\323\ for the Bureau, in exercising its nonbank supervisory authority, 
to use reports that have already been provided to Federal and State 
agencies and information that has been reported publicly. An industry 
commenter also stated that the proposed registry would conflict with 
the requirement at CFPA section 1024(b)(3) \324\ for the Bureau, in 
exercising its nonbank supervisory authority, to ``coordinate its 
supervisory activities with the supervisory activities conducted by 
prudential regulators, the State bank regulatory authorities, and the 
State agencies that license, supervise, or examine the offering of 
consumer financial products or services, including . . . requirements 
regarding reports to be submitted by such persons.'' \325\
---------------------------------------------------------------------------

    \323\ 12 U.S.C. 5514(b)(4); see also 12 U.S.C. 5515(b)(3), 
5516(b)(1).
    \324\ 12 U.S.C. 5514(b)(3).
    \325\ See id.
---------------------------------------------------------------------------

    The joint comment from State regulators stated that, because in the 
commenters' view the discrepancy between the number of nonbank entities 
licensed by States through NMLS and the number of firms subject to 
Bureau supervisory authority appears negligible, the proposed Bureau 
registry would likely be largely duplicative of NMLS and provide little 
new insight for risk-based supervision purposes, particularly for the 
mortgage and money services business industries.
    An industry commenter stated the proposal did not comply with CFPA 
section 1024(b)(2) and did not properly assess the impact of the rule 
on attorneys and law firms under that statutory provision. The 
commenter stated that creditors' rights attorneys and law firms already 
are heavily regulated at the State level, the Bureau should have 
considered the unique characteristics of creditors' rights law firms, 
and such firms should be exempt from the proposed rule. Another 
industry commenter stated that the proposed written-statement 
requirements were inconsistent with section 1024(b)(2) since the $1 
million amount in proposed Sec.  1092.201(q)'s definition of 
``supervisory registered entity'' should be increased.
    Consumer advocate commenters generally supported the Bureau's 
proposal to collect information as described in the proposal. A 
consumer advocate commenter stated that in light of the large number of 
nonbanks subject to Bureau oversight, the self-reporting requirements 
in the proposed rule would assist the Bureau's supervisory 
prioritization efforts and would help the Bureau identify wider trends 
in relevant markets. A consumer advocate commenter stated that it would 
not be a substantial burden for companies to identify covered orders, 
since they would presumably have these orders on

[[Page 56088]]

hand for their own in-house compliance purposes.
    An industry commenter stated that the Bureau should establish a 
minimum threshold of five non-expired covered orders before requiring 
registration, in order to better distinguish nonbanks with only a few 
consent orders from ``repeat offenders'' and reduce consumer confusion.
    The SBA Office of Advocacy stated that the Bureau should issue 
clear guidance to assist small entities with compliance with the rule's 
submission and other requirements.
    See the section-by-section discussion of Sec.  1092.201(e) 
regarding a comment related to the final rule's treatment of parties 
not expressly named in the covered order.
Response to Comments Received
    The Bureau is finalizing a new section at Sec.  1092.203 that will 
provide that, with respect to any covered order that is published on 
the NMLS Consumer Access website, a covered nonbank that is identified 
by name as a party subject to the order may elect to comply with the 
one-time registration option described in that section in lieu of 
complying with the requirements of Sec. Sec.  1092.202 and 1092.204. To 
the extent that CFPA section 1024(b)(4) may apply to Bureau rulemakings 
under section 1024(b)(7), Sec.  1092.203 will ensure that the 
requirements in the Bureau's rule reflect, to the fullest extent 
possible, ``reports pertaining to persons described in [section 
1024(a)(1)] that have been provided or required to have been provided 
to a Federal or State agency'' and ``information that has been reported 
publicly.'' \326\ In particular, covered nonbanks with NMLS-published 
covered orders can opt for a streamlined registration process designed 
to provide notice that information regarding such covered orders is 
available through the NMLS. After the existence of NMLS-published 
covered orders has been directed to the Bureau's attention through a 
streamlined registration under Sec.  1092.203, the Bureau can use any 
information available through the NMLS to help inform its risk-based 
supervisory prioritization determinations under CFPA section 1024(b)(2) 
and its supervisory activities under section 1024(b)(1).
---------------------------------------------------------------------------

    \326\ 12 U.S.C. 5514(b)(4).
---------------------------------------------------------------------------

    To the extent these industry commenters suggest that additional 
changes would be required in order to satisfy the Bureau's obligations 
under CFPA section 1024(b)(4)--for example, by not collecting 
information that is also published by an individual State agency--the 
Bureau declines to make such changes. First, a central purpose of the 
rule's registration requirements is to ensure that the Bureau is made 
aware and provided with copies of ``information that has been reported 
publicly''--i.e., information related to public enforcement orders--in 
a manner that is usefully associated with covered nonbanks. Second, the 
Bureau views the registry as a means to increase its ability to obtain 
and use such information and thus promote Congress's intent in adopting 
these statutory provisions. CFPA section 1024(b)(4) requires that the 
Bureau use such information ``to the fullest extent possible,'' and 
collecting this information makes it more ``possible'' for the Bureau 
to use this information.
    Likewise, to the extent that CFPA section 1024(b)(3) may apply to 
Bureau rulemakings under section 1024(b)(7), the Bureau has satisfied 
any obligation to coordinate with prudential regulators and relevant 
State authorities through the consultations described in part V of this 
preamble. Further, the Bureau is finalizing Sec.  1092.203 in part to 
facilitate coordination with the State authorities described in CFPA 
section 1024(b)(3), as well as to facilitate adoption of the 
``coordinated or combined systems for registration'' with State 
agencies discussed in CFPA sections 1022(c)(7)(C) and 
1024(b)(7)(D).\327\
---------------------------------------------------------------------------

    \327\ One of the authorities cited as a basis for components of 
the final rule is 12 U.S.C. 5512(c)(7), which provides that the 
``Bureau may prescribe rules regarding registration requirements 
applicable to a covered person, other than an insured depository 
institution, insured credit union, or related person.'' Congress 
provided that ``[i]n developing and implementing registration 
requirements under [12 U.S.C. 5512(c)(7)], the Bureau shall consult 
with State agencies regarding requirements or systems (including 
coordinated or combined systems for registration), where 
appropriate.'' 12 U.S.C. 5514(b)(7)--the proposed statutory basis 
for the written-statement requirement--includes a similar 
consultation provision.
---------------------------------------------------------------------------

    As discussed further in part IV(E) above and the section-by-section 
discussion of Sec.  1092.203 below, the Bureau does not believe that 
the existence of the NMLS renders the new Bureau registry unnecessary, 
including with respect to supervised registered entities. However, the 
Bureau is finalizing Sec.  1092.203 to provide that applicable entities 
may comply with the one-time limited registration option described in 
that section in lieu of complying with the requirements of Sec. Sec.  
1092.202 and 1092.204. The information obtained by the Bureau under the 
final rule, including Sec.  1092.203, will inform the Bureau's risk-
based supervisory prioritization efforts as well as its other 
functions.
    The Bureau does not agree that the final rule is inconsistent with 
CFPA section 1024(b)(2), whether with respect to attorneys and law 
firms or any other broad category of covered nonbanks that can be 
identified in advance of collecting information under the final rule. 
As an initial matter, CFPA section 1024(b)(2) does not govern this 
rulemaking. As the Bureau has explained, it relies on CFPA sections 
1022(b), 1022(c), and 1024(b)(7) in issuing this rule.\328\ By its own 
terms, CFPA section 1024(b)(2) applies only to exercises of the 
Bureau's supervisory authority under a different provision, CFPA 
section 1024(b)(1). Section 1024(b)(2) does not govern rulemakings; 
instead, it governs the Bureau's prioritization of entities for 
examinations and other supervisory activities under section 1024(b)(1). 
Therefore, the Bureau is not required to account for the risk-based 
prioritization factors set forth in section 1024(b)(2) in determining 
this rulemaking's scope. Moreover, as the Bureau discussed in the 
proposed rule, one of the purposes of this registry is to provide the 
Bureau with additional information to use for its prioritization of 
examinations and other supervisory activities under section 
1024(b)(2).\329\ Requiring an assessment under section 1024(b)(2) for 
rulemakings under section 1024(b)(7) would, in fact, limit the Bureau's 
ability to make informed assessments of individual entities for 
supervisory activities.
---------------------------------------------------------------------------

    \328\ See, e.g., 88 FR 6088 at 6103 (``The Bureau proposes to 
establish the NBR system under its registration and market-
monitoring rulemaking authorities under CFPA section 1022(b)(1), 
(c)(1)-(4), and (c)(7), and under its supervisory rulemaking 
authorities under CFPA section 1024(b)(7)(A), (B), and (C).'').
    \329\ Id. at 6095 (``The Bureau believes that the proposed 
registry would be especially useful with respect to the particular 
nonbank markets that are subject to the Bureau's supervision and 
examination authority under CFPA section 1024(a). In those markets, 
the Bureau would be able to take account of risks identified through 
the proposed registry in conducting its risk-based supervisory 
prioritization and enforcement work.'').
---------------------------------------------------------------------------

    In any event, even if the Bureau were exercising authority under 
section 1024(b)(1) here, and thus section 1024(b)(2) applied, that 
would not affect the rulemaking's outcome. The Bureau believes that the 
risk associated with covered orders is significant and that a 
consideration of the factors set forth in section 1024(b)(2) supports 
imposing the rule's requirements. As discussed in part IV(B), depending 
upon the circumstances, the Bureau may consider the existence of an 
order requiring registration under the final rule to be a risk factor 
under these provisions for covered persons subject to the final

[[Page 56089]]

rule--in particular, under CFPA section 1024(b)(2)(C)-(E). Moreover, 
the information that the Bureau obtains under the rule will inform its 
supervisory prioritization efforts with respect to individual entities 
and will otherwise facilitate its supervision of covered nonbanks that 
are described in CFPA section 1024(a)(1). In addition, consistent with 
CFPA sections 1024(b)(2)(A)-(B), the Bureau has effectively accounted 
for asset size and transaction volume by excluding persons with less 
than $5 million in annual receipts (as described in Sec.  
1092.201(q)(4)) from Sec.  1092.204's annual reporting requirements. 
For additional discussion of that exclusion, see the section-by-section 
discussion of Sec.  1092.201(q).
    The Bureau is finalizing Sec.  1092.202(b)(2)(i)'s requirement for 
covered nonbanks to register each covered order within 90 days of the 
order's effective date (or, in the initial phase of the registry, the 
applicable nonbank registry implementation date). The Bureau declines 
to establish a minimum number of covered orders to which a covered 
nonbank must be subject before requiring registration. That approach 
would lead to the omission of many covered orders that are relevant to 
risk to consumers, and would impair the ability of the Bureau and 
others to identify trends and patterns in the information collected. It 
would also lead to the omission of relevant covered nonbanks and 
supervised registered entities from the registry, which would mean that 
the Bureau would not be notified regarding the existence of such 
entities and would not learn that they were subject to a covered order. 
The approach would limit the Bureau's ability to seek additional 
information about the covered order and the covered nonbank and 
otherwise monitor risks to consumers as appropriate to inform the 
Bureau's functions. While, as discussed elsewhere in this preamble, the 
Bureau is very concerned about the risks to consumers presented by 
repeat offenders, even one covered order may be probative of 
significant risk to consumers. In addition, the Bureau would be less 
able to understand where covered orders are not being issued or 
obtained, depriving it of important information regarding the absence 
of covered orders. And supervised registered entities would not be 
subject to the rule's written-statement requirements until the 
threshold had been reached, unduly limiting the effectiveness of those 
requirements. The Bureau concludes that registration of each covered 
order will serve the purposes of the final rule described in part IV 
above. The Bureau disagrees that requiring registration of each covered 
order will lead to consumer confusion, as consumers and other users of 
the registry will have access to accurate information about the orders 
and nonbank. See the section-by-section discussion of Sec.  1092.205(a) 
below for additional discussion of related issues involving the 
potential publication of registry information.
    As provided in Sec.  1092.102(a), the Bureau will issue filing 
instructions that will provide covered nonbanks with specific 
information regarding their filing obligations under the final rule. 
The Bureau may consider issuing additional rules and guidance as may be 
necessary or appropriate.
Final Rule
    For the reasons discussed above and in the proposal, the Bureau is 
finalizing Sec.  1092.202(b) as proposed, with minor technical edits 
and a minor revision to reflect the renumbering of Sec.  1092.206 in 
the final rule.\330\
---------------------------------------------------------------------------

    \330\ See also the section-by-section discussions of Sec.  
1092.101(d) and (e) above regarding the Bureau's adoption of the 
revised terms ``nonbank registry'' and ``nonbank registry 
implementation date.''
---------------------------------------------------------------------------

Section 1092.202(c) Required Identifying Information and Administrative 
Information
Proposed Rule
    Proposed Sec.  1092.202(c) would have required a registered entity 
to provide all identifying information and administrative information 
required by the NBR system. In filing instructions the Bureau would 
have issued under proposed Sec.  1092.102(a), the Bureau would have 
specified the types of identifying information and administrative 
information registered entities would be required to submit. Proposed 
Sec.  1092.201(a) would have defined the term ``administrative 
information,'' and proposed Sec.  1092.201(g) would have defined the 
term ``identifying information.'' Proposed Sec.  1092.202(c) also would 
have clarified that the Bureau's filing instructions may require joint 
or combined submissions to the NBR system by covered nonbanks that are 
affiliates as defined in proposed Sec.  1092.101(a).
    The Bureau requested comment on the general requirements of 
proposed Sec.  1092.202(c), including the requirement to register and 
update identifying information and administrative information within 
the timeframes described in proposed Sec.  1092.202(b). The Bureau 
requested comment on whether registration of updates with respect to 
this information should be required more or less often, and if so, why 
and in what circumstances. The Bureau also sought comment on the 
proposed distinctions between identifying information and 
administrative information, and whether collection of other types of 
information would help in the administration of the NBR system or 
benefit its users.
Comments Received
    An industry commenter asked that the Bureau clarify that entities 
would only be required to report, and only be publicly affiliated with, 
orders wherein they are named.
    Comments addressing the proposal's approach to the written 
statement, including requirements to designate and submit the names and 
titles of attesting executives and associated criteria for such a 
designation, are addressed in the section-by-section discussion of 
Sec.  1092.204 below.
Response to Comments Received
    As provided in Sec.  1092.201(e)(1)(i), in order to qualify as a 
``covered order'' under the final rule, an order must among other 
things ``[i]dentif[y] a covered nonbank by name as a party subject to 
the order.'' Where a covered nonbank is not identified by name as a 
party subject to an order, the order will not be a covered order with 
respect to that covered nonbank, and the covered nonbank will not be 
subject to any of the requirements of the final rule with respect to 
the covered order. A covered nonbank is not subject to the requirements 
of the rule with respect to a covered order on the sole grounds that 
its affiliated covered nonbank is subject to those requirements. 
However, as provided at Sec.  1092.202(c), the Bureau may require, via 
filing instructions issued pursuant to Sec.  1092.102(a), two or more 
affiliated covered nonbanks to submit a joint or combined filing 
statement with respect to a covered order, where those affiliated 
covered nonbanks are each subject to the requirements of Sec.  1092.202 
with respect to such covered order. Also, as discussed in the section-
by-section discussion of Sec. Sec.  1092.201(a) and 1092.202(d) above, 
for any covered order that a covered nonbank must register under Sec.  
1092.202, the Bureau may via filing instructions require the registered 
covered nonbank to identify to the Bureau, as administrative 
information required under Sec.  1092.202(c), the names of any of the 
registered covered nonbank's affiliates

[[Page 56090]]

registered under subpart B with respect to the same covered order.
Final Rule
    For the reasons set forth above, the Bureau is finalizing Sec.  
1092.202(c) as proposed.\331\
---------------------------------------------------------------------------

    \331\ See also the section-by-section discussions of Sec.  
1092.101(d) and (e) above regarding the Bureau's adoption of the 
revised terms ``nonbank registry'' and ``nonbank registry 
implementation date.''
---------------------------------------------------------------------------

    See also the discussion regarding the final rule's treatment of 
affiliates of insured depository institutions and insured credit unions 
in the section-by-section discussions of Sec.  1092.201(d) and (q) 
above.
Section 109.202(d) Information Regarding Covered Orders
Proposed Rule
    Proposed Sec.  1092.202(d) would have required a registered entity 
to provide additional types of information more specifically related to 
each covered order subject to proposed Sec.  1092.202. First, proposed 
Sec.  1092.202(d)(1) would have required a registered entity to provide 
a fully executed, accurate, and complete copy of the covered order, in 
a format specified by the Bureau. This information would have helped 
the Bureau more clearly identify the covered orders to which the 
registered entity is subject, as well as the terms of those orders, and 
would provide access to updated copies of those orders. The information 
would have provided similar benefits to other regulators, consumers, 
and other users of the NBR system upon publication.
    This proposed section would have also provided that any portions of 
a covered order that are not public must not be submitted. These 
nonpublic portions would have been required to be clearly marked on the 
copy submitted, to promote ease of use. For example, a nonpublic 
section could have been redacted and marked as nonpublic. As discussed 
above regarding proposed Sec.  1092.201(e)(3) and (k), the Bureau was 
concerned that requiring registration and disclosure of confidential 
supervisory information or other nonpublic information might interfere 
with the functions and missions of other agencies and did not believe 
that requiring such registration and disclosure is necessary to 
accomplish the purposes of the proposed rule. The Bureau sought comment 
on this aspect of the proposed rule. The Bureau also sought comment on 
whether it should permit covered nonbanks to submit only select 
portions of covered orders, and if so, what portions of such orders 
should be submitted, and which should be excluded from the submission 
requirement.
    Proposed Sec.  1092.202(d)(2) would have required a registered 
entity to provide five additional types of data regarding each covered 
order subject to Sec.  1092.202. The Bureau believed all of the 
described data fields would be useful to the Bureau in locating, 
understanding, organizing, and using the information submitted. The 
Bureau also explained in its proposal that upon publication, the data 
fields would be similarly useful to other users of the NBR system as 
well. In addition, the Bureau believed that requiring covered nonbanks 
to identify and submit these fields would help ensure accuracy and 
lower administrative costs for the Bureau.
    First, proposed Sec.  1092.202(d)(2)(i) would have required a 
registered entity to identify the government entity that issued the 
covered order. Second, proposed Sec.  1092.202(d)(2)(ii) would have 
required a registered entity to provide the covered order's effective 
date, as that term is defined at proposed Sec.  1092.201(f). Third, 
proposed Sec.  1092.202(d)(2)(iii) would have required a registered 
entity to provide the date of expiration, if any, of the covered order, 
or a statement that there is none. The Bureau explained in its 
proposal, for example, where a covered order expires by its own terms 
after perhaps five or some other term of years, the registered entity 
would be required to provide that information. The Bureau requested 
comment on whether the date of expiration of covered orders would be 
sufficiently clear to comply with this provision or whether additional 
specification on this point from the Bureau would be useful. Fourth, 
proposed Sec.  1092.202(d)(2)(iv) would have required a registered 
entity to identify all covered laws found to have been violated or, for 
orders issued upon the parties' consent, alleged to have been violated, 
in the covered order. The Bureau would have expected that registered 
entities would satisfy this requirement by providing accurate Federal 
or State citations for the applicable covered laws. The Bureau believed 
this information would increase the usefulness of the NBR system. It 
would have better enabled the Bureau to identify and assess any risks 
to consumers relating to the violations, and once published would have 
also enabled users of the registry to more easily search and review 
filings.
    Fifth, proposed Sec.  1092.202(d)(2)(v) would have required a 
registered entity to provide the names of any of the registered 
entity's affiliates registered under subpart B with respect to the same 
covered order. The Bureau anticipated that this information would be 
useful in identifying affiliate relationships between registered 
entities that are registered with the NBR system, which might not 
otherwise be obvious or apparent. Proposed Sec.  1092.101(a) would have 
defined the term ``affiliate'' to have the meaning given to that term 
in the CFPA, which would have included any person that controls, is 
controlled by, or is under common control with another person.\332\
---------------------------------------------------------------------------

    \332\ See 12 U.S.C. 5481(1).
---------------------------------------------------------------------------

    Proposed Sec.  1092.202(d)(3) would have required a registered 
entity, if the registered entity is a supervised registered entity, 
also to file the name and title of its attesting executive for purposes 
of proposed Sec.  1092.203 with respect to the covered order. The 
benefits of designating an attesting executive were discussed in detail 
in proposed section IV(D). In addition, the Bureau believed that its 
collection (and ultimate publication) in the registry of the name and 
title of a supervised registered entity's attesting executive would be 
important to the Bureau and other users of the NBR system. The Bureau 
believed that requiring the entity to identify the name and title of 
the attesting executive designated in connection with each covered 
order would assist the Bureau in administering the requirements in 
proposed Sec.  1092.203 regarding annual written statements. In 
addition, as discussed below regarding proposed Sec.  1092.203(b), the 
Bureau explained that collecting information regarding the name and 
title of the attesting executive for a given covered order would 
provide the Bureau with insight into the entity's organization, 
business conduct, and activities, and would inform the Bureau's 
supervisory work, including its risk-based prioritization process. The 
Bureau also believed that publishing this information would have also 
provided benefits to the public and other users of the proposed NBR 
system, as discussed further below in connection with proposed Sec.  
1092.204(a).
    The Bureau would have relied on two separate statutory grants of 
authority in collecting the attesting executive's name and title, each 
of which would provide an independent statutory basis for proposed 
Sec.  1092.202(d)(3). The Bureau would have collected this information 
under its market-monitoring authority under CFPA section 1022(c)(1) and 
(4) to ``gather information regarding the organization, business 
conduct, markets, and activities'' of supervised registered 
entities.\333\ The Bureau would have also

[[Page 56091]]

collected this information under its CFPA section 1024(b)(7) authority 
to prescribe rules regarding registration, recordkeeping, and other 
requirements for covered persons subject to Bureau supervision under 
CFPA section 1024.\334\
---------------------------------------------------------------------------

    \333\ 12 U.S.C. 5512(c)(1), (4).
    \334\ 12 U.S.C. 5514(b)(7).
---------------------------------------------------------------------------

    The Bureau requested comment on whether proposed Sec.  1092.202(d) 
should identify additional or different categories of information 
collected by the NBR system, including but not limited to information 
regarding covered orders or the registered entity.
Comments Received
    An industry commenter stated that the proposal's requirement to 
submit redacted orders would confuse the public, and that in cases 
where a portion of a covered order is redacted or confidential, the 
whole order should stay off the registry.
    A consumer advocate commenter stated that the treatment of 
nonpublic information under proposed Sec.  1092.202(d) demonstrated 
that the Bureau was taking steps to protect confidential and otherwise 
nonpublic information relevant to orders.
Response to Comments Received
    See the section-by-section discussion of Sec.  1092.201(m) above 
regarding the treatment of nonpublic portions of orders under the final 
rule.
    See the section-by-section discussion of Sec.  1092.201(l) above 
regarding an industry commenter's suggestion to treat multiple orders 
as a single order under certain circumstances.
    See the section-by-section discussion of Sec. Sec.  1092.204(b) and 
1092.205(a) below for discussions regarding the final rule's 
requirements to designate an attesting executive for each covered order 
and the Bureau's reasons for collecting and potentially publishing that 
information.
Final Rule
    For the reasons set forth below and in the description of the 
proposed rule above, the Bureau is finalizing Sec.  1092.202(d) as 
proposed, with several revisions.
    First, as discussed further below in the section-by-section 
discussion of Sec.  1092.205(a), the Bureau has determined not to 
mandate with respect to every covered order the collection of 
information regarding the names of the person's affiliates registered 
under subpart B with respect to the same covered order in the final 
rule. Under the final rule, Sec.  1092.202(d)(2)(v) as proposed has 
been deleted, but the Bureau may determine to collect this information 
as ``administrative information'' under Sec.  1092.202(c). In filing 
instructions issued under Sec.  1092.102(a), the Bureau will specify 
whether and how it will collect such information. As described in the 
section-by-section discussion of Sec.  1092.205(a) below, the Bureau 
will not publish such information under Sec.  1092.205(a) if it is 
collected.
    Second, the Bureau is finalizing a clarification at Sec.  
1092.202(d)(2)(i) to provide that a registered entity shall provide to 
the nonbank registry, for each covered order subject to Sec.  1092.202, 
information regarding the agency (or agencies) and court(s) that issued 
or obtained the covered order, as applicable. The Bureau is finalizing 
this change to the proposed rule in order to clarify that covered 
orders may be issued or obtained by more than one agency or court, and 
to collect more accurate and comprehensive information about covered 
orders. In general, for covered orders that are issued by a court of 
law, the nonbank registry will collect information regarding the court 
that issued the order as well as the agency or agencies that brought 
the applicable proceeding and obtained the order. For covered orders 
issued directly by agencies in an administrative action or other agency 
proceeding, the nonbank registry generally will collect information 
regarding the issuing agency or agencies.
    Third, the Bureau is finalizing a new provision at Sec.  
1092.202(d)(2)(v) to provide that a registered entity shall provide to 
the nonbank registry, for each covered order subject to Sec.  1092.202, 
information regarding any docket, case, tracking, or other similar 
identifying number(s) assigned to the covered order by the applicable 
agency(ies) or court(s). Collecting and potentially publishing this 
information will better enable the Bureau and other users of the 
registry to identify the applicable covered order, to distinguish it 
from other orders, and to understand any connections between the order 
and the covered nonbank with other information about the covered order 
and covered nonbank that the Bureau may possess or that may be 
otherwise available. As with the other required data fields, this 
information will be useful to the Bureau in locating, understanding, 
organizing, and using the information submitted and will be similarly 
useful to other users of the nonbank registry as well. In addition, 
requiring covered nonbanks to identify and submit such information will 
help ensure accuracy and lower administrative costs for the Bureau.
    Fourth, the Bureau is finalizing a minor revision at Sec.  
1092.202(d)(3) to reflect the renumbering of Sec.  1092.204.
Section 1092.202(e) Expiration of Covered Order Status
Proposed Rule
    Proposed Sec.  1092.202(e) would have provided for an outer limit 
on the time period during which the existence of a covered order would 
subject a registered entity to the requirements of proposed subpart B. 
The Bureau explained in its proposal that in circumstances where a 
covered order terminates (or otherwise ceases to remain in effect) 
within ten years after the order's effective date, the registered 
entity's obligations to update its filing under proposed Sec.  1092.202 
or to file written statements with respect to the covered order under 
proposed Sec.  1092.203 would cease after its final filing under 
proposed Sec.  1092.202(f)(1).\335\ The Bureau, however, recognized 
that some covered orders may not terminate (or otherwise cease to 
remain in effect) within ten years of the orders' effective dates. In 
such circumstances, proposed Sec.  1092.202(e) would have provided that 
a covered order shall cease to be a covered order for purposes of 
subpart B as of the later of: (1) ten years after its effective date; 
or (2) if the covered order expressly provides for a termination date 
more than ten years after its effective date, the expressly provided 
termination date.
---------------------------------------------------------------------------

    \335\ See the discussion of Sec.  1092.202(f) below.
---------------------------------------------------------------------------

    The Bureau preliminarily concluded that, in most cases, it may be 
less likely to obtain meaningful information in connection with 
existing orders after ten years have passed since their effective 
dates. The Bureau also preliminarily concluded that maintaining the 
proposal's registration and written-statement requirements for at least 
ten years after the effective date of covered orders that remain in 
effect would have provided useful information to the Bureau and other 
uses of the registry, as described in this proposal. Among other 
things, the Bureau believed that maintaining the obligation to update 
registration information for ten years would better enable the Bureau 
to identify covered nonbanks in the event a subsequent covered order 
requires additional registration. The Bureau also believed that 
limiting registration obligations to more recent orders would also help 
limit the burden imposed by proposed subpart B's requirements on 
covered nonbanks. However, where a covered order expressly provides for 
a later termination date, the Bureau

[[Page 56092]]

believed that it should continue to collect and publish information on 
the order under the provisions of proposed Sec. Sec.  1092.202 through 
1092.204. The Bureau sought comment on all aspects of proposed Sec.  
1092.202(e). In particular, the Bureau sought comment on whether to 
adopt a different approach to setting and determining the sunset period 
for orders, and on whether the proposed baseline ten-year period should 
be longer or shorter. The Bureau also sought comment on whether 
registered entities would benefit from additional guidance in 
determining whether a covered order expressly provides for a 
termination date more than ten years after its effective date, and what 
constitutes the expressly provided termination date of such a covered 
order.
    The Bureau also sought comment on whether the applicable sunset 
period should depend upon the content of the order. The Bureau 
explained in its proposal that, for example, it considered whether the 
sunset period for a covered order should be shorter where the only 
obligations based on alleged violations of covered laws and imposed in 
the public provisions of such order were to pay money (such as payment 
of a civil money penalty or fine, or payment of refunds, restitution, 
or disgorgement). Under this alternative approach, for such covered 
orders without express termination dates, the orders would have ceased 
being covered orders for purposes of subpart B after some period 
shorter than the ten-year sunset proposed here. The Bureau did not 
propose this approach for reasons of simplicity and administrative 
efficiency, and because the Bureau believes that the sunset provision 
in proposed Sec.  1092.202(e) would generally be preferable for most 
such covered orders. However, the Bureau sought comment on this 
proposed alternative and, more generally, on whether and why it should 
adopt a shorter sunset period for these orders. The Bureau also sought 
comment on other approaches that would establish different sunset 
periods depending on the content of the order, and other types of 
orders that might have different sunset periods.
    The Bureau further considered requiring registered entities to 
continue treating an order that would otherwise sunset under the 
proposal as a covered order for purposes of the proposed rule if the 
Bureau determined, after providing the entity notice and an opportunity 
to respond, that continuing to do so was necessary for the Bureau to 
fulfill its monitoring or supervisory responsibilities. For example, as 
the Bureau explained in the proposal, based on information supplied by 
another agency or otherwise in its possession, the Bureau may have 
cause to believe that the nonbank continued to be in violation of the 
order. For such cases, the Bureau considered requiring continued 
compliance with the requirements of proposed subpart B beyond the 
expiration period if the Bureau ultimately concluded doing so was 
necessary for the Bureau to fulfill its monitoring or supervisory 
responsibilities. The Bureau did not propose this approach for reasons 
of simplicity and administrative efficiency, and because the Bureau 
believed that the proposed sunset provision would be likely to provide 
sufficient information regarding most covered orders. However, the 
Bureau sought comment on whether it should include this additional 
requirement in the final rule and whether any additions or subtractions 
to it would better achieve its intended purpose. The Bureau also sought 
comment on whether, if it included this additional requirement in a 
final rule, it should specify any alternative or additional criteria 
that the Bureau might consider in reaching its determination whether a 
particular covered order should remain subject to the requirements of 
subpart B.
Comments Received
    Some comments incorrectly referred to proposed Sec.  1092.202(e)'s 
sunset provisions as specifying when information regarding covered 
orders or covered nonbanks would be removed from the registry.
    An industry commenter agreed with the proposal's establishment of a 
sunset date for registration of covered orders under Sec.  1092.202(e). 
Another industry commenter stated that the Bureau should establish a 
process for entities to be removed from the public registry after a 
specific set of criteria is met, and that the Bureau should also 
establish an appeals process that would permit entities to contest 
their inclusion on the registry.
    Industry commenters also stated the text of 1092.202(e)(1) was 
unclear and proposed specific revisions. Commenters stated that 
information regarding covered orders (and related covered nonbanks) 
should be removed from the registry earlier than after ten years after 
its effective date. One industry commenter stated that most regulatory 
and supervisory agencies are reluctant to agree to termination dates. 
Another industry commenter stated that there would be few instances in 
which a consent order does not contain an expiration date, thereby 
making the timing set out in Sec.  1092.202(e)(1) almost entirely 
irrelevant. This commenter stated that the sunset period established 
under proposed Sec.  1092.201(e) should be the later of five years or 
the express termination period of the covered order. Another industry 
commenter stated that covered orders that have no termination date 
should be subject to the proposed registry for a period of three years, 
not ten, in part because information contained in the proposed registry 
associated with older covered orders would be inaccurate, outdated or 
obviated and would pollute the registry. This commenter also stated 
that proposed Sec.  1092.202(e) could be interpreted to mean that all 
covered orders are subject to updates or written statements for ten 
years, and proposed a revision that would state that if a covered order 
expressly provides for a termination date ten (or five) years or less 
after its effective date, Sec.  1092.201(e)'s sunset provision would 
apply on the expressly provided termination date. Another industry 
commenter proposed an alternative timeframes of two years after an 
order's effective date. The SBA Office of Advocacy expressed concern 
that requiring an order to be a covered order for ten years after its 
effective date was overly punitive and stated that such an order should 
no longer be considered a covered order when it is no longer in effect.
Response to Comments Received
    The Bureau is adopting Sec.  1092.202(e) of the final rule, which 
provides for an outer limit on the time period during which the 
existence of a covered order would subject a registered entity to the 
registration requirements. In circumstances where a covered order 
terminates (or otherwise ceases to remain in effect) within ten years 
after the order's effective date, the registered entity's obligations 
to update its filing or to file written statements with respect to the 
covered order would cease after its final filing under Sec.  
1092.202(f). Where a covered order does not terminate (or otherwise 
cease to remain in effect) within ten years of the order's effective 
date, the covered order would no longer require registration as of the 
later of: (1) ten years after its effective date; or (2) if the covered 
order expressly provides for a termination date more than ten years 
after its effective date, the expressly provided termination date. The 
Bureau finalizes its preliminary conclusions in the proposal \336\ 
that, in most cases, it may be less likely to obtain meaningful 
information in connection with existing orders after ten

[[Page 56093]]

years have passed since their effective dates, and that maintaining the 
proposal's registration and written-statement requirements for at least 
ten years after the effective date of covered orders that remain in 
effect will provide useful information to the Bureau and other uses of 
the registry, as described in part IV.
---------------------------------------------------------------------------

    \336\ 88 FR 6088 at 6119.
---------------------------------------------------------------------------

    In response to comments incorrectly suggesting that proposed Sec.  
1092.202(e)'s sunset provisions would have specified when information 
regarding covered orders or covered nonbanks would be removed from the 
Bureau's registry, the Bureau clarifies that, under the final rule, 
Sec.  1092.202(e) and (f) together establish when, with respect to a 
particular covered order, a covered entity's obligations to submit 
updated filings under Sec.  1092.202(b)(2)(ii) and to comply with Sec.  
1092.204's written-statement requirements expire. These provisions of 
the final rule do not address when the Bureau intends to remove 
information from the nonbank registry or otherwise to cease publication 
of such information as provided at Sec.  1092.205. Under the final 
rule, the Bureau may maintain any information about covered orders and 
the covered nonbanks that are subject to them that may be published 
under the nonbank registry on a public website indefinitely, subject to 
the Bureau's discretion and pursuant to Sec.  1092.205 and other 
applicable law.
    With respect to the industry commenter's suggestion to establish a 
process to allow covered nonbanks to petition for removal from the 
registry before the sunset date established in Sec.  1092.201(e), the 
Bureau declines to adopt this suggestion. The Bureau believes that it 
is important to collect information regarding covered orders, including 
the annual written statement described in Sec.  1092.204 where 
applicable, on an ongoing basis for the periods of time described in 
the final rule. The Bureau declines to adopt criteria for determining 
whether covered nonbanks would no longer need to comply with these 
obligations with respect to particular covered orders. While the Bureau 
agrees that many covered nonbanks are likely to take steps to address 
issues relating to covered orders, such orders are nevertheless likely 
to remain probative of risk to consumers (including risks related to 
developments in markets for consumer financial products and services), 
and the Bureau concludes they should continue to be subject to these 
requirements. Also, the Bureau believes that engaging in an ongoing 
case-by-case assessment of entities' compliance efforts with respect to 
covered orders in order to determine whether particular covered orders 
are deserving of an exemption from registration requirements would 
invite frivolous petitions, increase the complexity involved in 
maintaining the nonbank registry, and would not be a good use of the 
Bureau's resources. Likewise, the Bureau disagrees that an appeals 
process for the nonbank registry is necessary. As with any other 
Federal consumer financial law, the Bureau expects covered nonbanks 
themselves to identify their responsibilities under the final rule and 
to comply with those obligations. Where an entity believes in good 
faith the final rule does not require registration, but is not certain 
the Bureau would agree with its interpretation, it may file an 
applicable good faith notification under Sec.  1092.202(g) or Sec.  
1092.204(f).
    The Bureau believes that the final rule is sufficiently clear for 
entities to comply with the final rule's requirements and that a 
modification to the proposed text is unnecessary. Section 1092.202(e) 
and (f) together address the variety of situations that may arise where 
a covered order does or does not expressly provide for a termination 
date, as well as situations where a covered order is modified or 
otherwise does not actually terminate according to its original terms. 
Under the final rule, a covered order that does not expressly provide 
for a termination date will cease to be a covered order ten years after 
its effective date pursuant to Sec.  1092.202(e), and the applicable 
covered nonbank must submit a final filing under Sec.  1092.202(f)(1) 
at that time--unless the order terminates earlier, in which case the 
covered nonbank must submit its final filing at that earlier time. 
Under Sec.  1092.201(e), a covered order that expressly provides for a 
termination date of ten years or less after its effective date will 
remain a covered order for a period of ten years from its effective 
date. Such an order may in fact terminate before the expiration of the 
ten-year period, in which case the applicable covered nonbank would 
submit a final filing under Sec.  1092.202(f)(1) upon termination of 
the order, whenever it occurs, and would have no further obligation to 
update its registration information or to file written statements with 
respect to the order. If, however, the order is extended or for some 
other reason does not terminate as originally provided, those 
obligations will continue until the order actually terminates or the 
ten-year period expires. And a covered order that expressly provides 
for a termination date more than ten years after its effective date 
will remain a covered order, and thus subject to the rule's 
registration and (if applicable) written-statement requirements, until 
it terminates, at which time the covered nonbank must submit a final 
filing notice under Sec.  1092.202(f)(1).
    Where a covered order terminates under its own terms or otherwise, 
under Sec.  1092.202(f)(2), such obligations (including the obligation 
to submit an annual written statement) with respect to such a covered 
order will terminate following the filing of the final submission 
described in Sec.  1092.202(f)(1). Thus, although the Bureau is not 
finalizing a modification to the sunset period established under 
proposed Sec.  1092.201(e) to directly reflect the termination of a 
covered order as requested by the industry commenters and the SBA 
Office of Advocacy, Sec.  1092.202(f)(1) and (2) provide that upon 
termination of the order a covered nonbank may submit a final filing 
and be relieved of its further obligations under appropriate 
circumstances, which essentially accomplishes the same result.
    The Bureau is adopting the proposal's approach to the amount of 
time for which such requirements are imposed for non-terminated orders 
under Sec.  1092.202(e). The Bureau finalizes its preliminary 
conclusions in the proposal \337\ that, in most cases, it may be less 
likely to obtain meaningful information in connection with existing 
orders after ten years have passed since their effective dates, and 
that maintaining the proposal's registration and written-statement 
requirements for at least ten years after the effective date of covered 
orders that remain in effect will provide useful information to the 
Bureau and other uses of the registry.
---------------------------------------------------------------------------

    \337\ 88 FR 6088 at 6119.
---------------------------------------------------------------------------

    The Bureau believes that, on average, covered orders that have not 
been terminated are likely to remain probative of risk to consumers for 
at least the period of time specified in Sec.  1092.202(e). While the 
Bureau agrees that it is possible that entities that are subject to 
such covered orders may have taken significant steps to address 
violations of law or other problems identified in the order, or 
otherwise taken steps to prevent or remedy related issues, the Bureau 
believes that the existence of such covered orders remains probative of 
risk to consumers (including risks related to developments in markets 
for consumer financial products and services) notwithstanding such 
subsequent developments and merits continued imposition of the related 
registration and written-

[[Page 56094]]

statement requirements. The final rule's obligations for registered 
entities to update their identifying and other information will help 
ensure that the information contained in the registry remains accurate 
and up to date. When such an order terminates, the covered nonbank may 
submit a final filing under Sec.  1092.202(f)(1).
Final Rule
    For the reasons set forth above and in the description of the 
proposal, the Bureau is finalizing Sec.  1092.202(e) as proposed.
Section 1092.202(f) Requirement To Submit Revised and Final Filings 
With Respect to Certain Covered Orders
Proposed Rule
    Proposed Sec.  1092.202(f) would have addressed situations where a 
covered order is terminated, modified, or abrogated (whether by its own 
terms, by action of the applicable agency, or by a court). It would 
have also addressed situations where an order ceases to be a covered 
order for purposes of subpart B by operation of proposed Sec.  
1092.202(e). In all such cases, proposed Sec.  1092.202(f)(1) would 
have required the registered entity to submit a revised filing to the 
NBR system within 90 days after the effective date of the order's 
termination, modification, or abrogation, or after the date the order 
ceases to be a covered order. The Bureau believed that this requirement 
would help in administering the registry, and supporting the Bureau's 
monitoring work by ensuring that the registry is up to date.
    Proposed Sec.  1092.202(f)(2) would have addressed situations where 
a covered order no longer remains in effect or no longer qualifies as a 
covered order due to the covered order's termination, modification, or 
abrogation, or the application of Sec.  1092.202(e). In such cases, 
proposed Sec.  1092.202(f)(2) would have clarified that following its 
final filing under paragraph (f)(1) with respect to the covered order, 
the registered entity would have no further obligation to update its 
filing or to file written statements with respect to such covered order 
under proposed subpart B. However, the Bureau explained that it 
expected to make historical information publicly available via the NBR 
registration system. As provided at proposed Sec.  1092.201(m), the 
proposal would have defined the term ``remains in effect'' to mean that 
the covered nonbank remains subject to public provisions of the order 
that impose obligations on the covered nonbank to take certain actions 
or to refrain from taking certain actions based on an alleged violation 
of a covered law. The Bureau explained that, once a covered nonbank no 
longer remains subject to such public provisions, proposed Sec.  
1092.202(f)(2) would permit the covered nonbank to cease updating its 
registration information and filing written statements with respect to 
the order.
Comments Received and Final Rule
    An industry commenter expressed support for proposed Sec.  
1092.202(f)'s treatment of covered orders containing termination dates. 
The Bureau did not receive any other comments specifically regarding 
Sec.  1092.202(f). Comments addressing the proposal's approach to the 
sunset period established in Sec.  1092.202(e) are addressed in the 
section-by-section discussion of Sec.  1092.202(e) above.
    For the reasons set forth in the description of the proposed rule 
above, the Bureau is finalizing Sec.  1092.202(f) as proposed, with 
minor technical edits.\338\
---------------------------------------------------------------------------

    \338\ See also the section-by-section discussions of Sec.  
1092.101(d) and (e) above regarding the Bureau's adoption of the 
revised terms ``nonbank registry'' and ``nonbank registry 
implementation date.''
---------------------------------------------------------------------------

Section 1092.202(g) Notification by Certain Persons of Non-Registration 
Under This Section
Proposed Rule
    Proposed Sec.  1092.202(g) would have provided that a person may 
submit a notice to the NBR system stating that it is not registering 
pursuant to this section because it has a good-faith basis to believe 
that it is not a covered nonbank or that an order in question does not 
qualify as a covered order. The Bureau explained that such a filing 
could be combined with any similar filing under proposed Sec.  
1092.203(f).\339\ Proposed Sec.  1092.202(g) would have also required 
the person to promptly comply with Sec.  1092.202 upon becoming aware 
of facts or circumstances that would not permit it to continue 
representing that it has a good-faith basis to believe that it is not a 
covered nonbank or that an order in question does not qualify as a 
covered order. The Bureau proposed to treat information submitted under 
this paragraph as ``administrative information'' as defined by proposed 
Sec.  1092.201(a).
---------------------------------------------------------------------------

    \339\ See also the section-by-section discussion of Sec.  
1092.204(f), which provides a similar option with respect to Sec.  
1092.204.
---------------------------------------------------------------------------

    While the Bureau believed the reporting and registration 
requirements under proposed Sec.  1092.202 would impose very minimal 
burden on nonbank covered persons, and that determining an entity's 
status as a covered nonbank (or an order's status as a covered order) 
should be a straightforward task for the vast majority of relevant 
persons, the Bureau proposed Sec.  1092.202(g) as an additional means 
of providing flexibility to those few entities where uncertainty in 
some respect raises good-faith concerns that they do not meet the 
definition of a covered nonbank (or an order does not meet the 
definition of a covered order). Under the proposal, such persons could 
elect to file a notice under proposed Sec.  1092.202(g). The Bureau 
explained in its proposal that when a person makes a non-frivolous 
filing under proposed Sec.  1092.202(g) stating that it has a good 
faith basis to believe that it is not a covered nonbank (or that an 
order is not a covered order), the Bureau would not bring an 
enforcement action against that person based on the person's failure to 
comply with proposed Sec.  1092.202 unless the Bureau has first 
notified the person that the Bureau believes the person does in fact 
qualify as a covered nonbank (or that an order does qualify as a 
covered order) and has subsequently provided the person with a 
reasonable opportunity to comply with proposed Sec.  1092.202.
    Among other things, the Bureau would have permitted entities to 
file notifications under proposed Sec.  1092.202(g) when they have a 
good-faith basis to believe that they do not qualify as a ``covered 
nonbank'' because they constitute part of a ``State,'' as that term is 
defined in CFPA section 1001(27).\340\ Under proposed Sec.  
1092.102(c), the filing of such a notification would not have affected 
the entity's ability to dispute more generally that it qualifies as a 
person subject to Bureau authority.\341\
---------------------------------------------------------------------------

    \340\ 12 U.S.C. 5481(27). As discussed above, Sec.  
1092.201(d)(3) of the final rule excludes States from the definition 
of ``covered nonbank.''
    \341\ The Bureau noted that, as an alternative to filing a 
notification under proposed Sec.  1092.202(g), an entity could 
simply choose to register under the proposal, even though it has a 
good faith basis for believing that it does not qualify as a covered 
nonbank (or that its order does not qualify as a covered order). 
Under proposed Sec.  1092.102(c), such registration would not 
prejudice the entity's ability to dispute the Bureau's authority 
over it.
---------------------------------------------------------------------------

    The Bureau anticipated that, in most cases, it would not respond to 
Sec.  1092.202(g) notices with the Bureau's views on whether filers in 
fact qualify as covered nonbanks (or whether orders in fact qualify as 
covered orders). The Bureau also emphasized that a non-response from 
the Bureau should not be misapprehended as Bureau acquiescence in the 
filer's assertions in the notice (or in the legitimacy of the filer's 
assertion of good faith). The Bureau, however, preliminarily

[[Page 56095]]

concluded that obtaining these notifications may assist the Bureau in 
better understanding how potentially regulated entities interpret the 
scope of proposed Sec.  1092.202.
    The Bureau considered alternatives to proposed Sec.  1092.202(g), 
including an alternative whereby entities would not file a notice of 
non-registration with the Bureau, but could avoid penalties for non-
registration if in fact they could establish a good-faith belief that 
they did not qualify as covered nonbanks subject to Sec.  1092.202 (or 
their orders did not qualify as covered orders). The Bureau explained 
in its proposal that under this alternative, entities would maintain 
such good-faith belief so long as the Bureau had not made clear that 
Sec.  1092.202 would apply to them (or their orders). Although the 
Bureau preliminarily concluded that this alternative was not preferable 
to requiring entities to actually file a notice of non-registration, 
the Bureau sought comment on whether it should finalize this 
alternative instead. It also sought comment on whether, if it finalized 
this alternative, entities would require additional guidance on the 
circumstances pursuant to which an entity could no longer legitimately 
assert a good-faith belief that Sec.  1092.202 would not apply to its 
conduct. While the Bureau anticipated that such circumstances would 
certainly include entity-specific notice from the Bureau that Sec.  
1092.202 applies, the Bureau did not believe such notice should be 
required to terminate a good-faith defense to registration. Among other 
circumstances, the Bureau anticipated that at least formal Bureau 
interpretations of (for example) the definition of a ``covered person'' 
under the CFPA, or published Bureau interpretations specific to the 
scope of the proposed registration requirements, would generally 
suffice to terminate such belief.
Comments Received
    Tribes commenting on the proposal generally opposed proposed 
Sec. Sec.  1092.202(g) and 1092.203(f) as unworkable or inappropriate 
in the context of determining the rule's coverage of entities 
affiliated or potentially affiliated with tribes. These commenters 
asserted that tribes, as self-determining bodies, are the only ones 
competent to determine the status of an entity as enjoying Tribal 
sovereignty. Thus, in their view, U.S. government institutions--whether 
the Bureau, other U.S. regulators, or U.S. courts--lack competence to 
make such determinations. For these reasons, these commenters generally 
opposed the notion that the Bureau would be evaluating the legal 
foundation for good-faith notifications under proposed Sec. Sec.  
1092.202(g) and 1092.203(f) by entities affiliated with tribes. In 
their view, rather than collecting and reviewing such notifications, 
the Bureau should consult with relevant tribes if it has questions 
about the relationship of a particular entity with a tribe. Tribal 
commenters also stated that requiring tribe-affiliated entities to 
submit good-faith notifications was itself a violation of Tribal 
sovereignty.
    Tribal commenters stated that these good-faith notification 
provisions confuse the issue as to whether tribes are exempt, and that 
they were unnecessary and should be removed.
    As described above, the Bureau specifically sought comment on an 
alternative to proposed Sec.  1092.202(g) whereby entities would not 
file a notice of non-registration with the Bureau, but could avoid 
penalties for non-registration if in fact they could establish a good-
faith belief that they did not qualify as covered nonbanks subject to 
Sec.  1092.202 (or their orders did not qualify as covered orders). 
Tribal commenters stated that the Bureau should adopt this alternative.
    Several Tribal commenters also stated that publication of 
Sec. Sec.  1092.202(g) and 1092.203(f) notifications could expose the 
tribe to costly, frivolous private litigation, as well as force the 
Bureau to take a position in connection with third-party claims 
regarding the sovereign status of a tribe-affiliated entity.
    Proposed Sec. Sec.  1092.202(g) and 1092.203(f) would have required 
a person to promptly comply with applicable requirements upon becoming 
aware of facts or circumstances that would not permit it to continue 
representing that it has a good-faith basis to believe that it is not a 
covered nonbank or supervised registered entity, as applicable, or that 
an order in question does not qualify as a covered order. A Tribal 
commenter stated that this requirement's reference to unspecified facts 
and circumstances was vague and overbroad, and stated that the last 
sentence of proposed Sec. Sec.  1092.202(g) and 1092.203(f) should be 
deleted.
Response to Comments Received
    The Bureau disagrees with the tribes' comments to the extent they 
suggest the Bureau cannot evaluate the legal significance of 
relationships that nonbank covered persons providing consumer financial 
products or services claim to have with tribes.\342\ The Bureau also 
notes that if an entity is a federally recognized Indian tribe, it is 
excluded from the definition of the term ``covered nonbank'' under 
Sec.  1092.201(d)(3) \343\ and thus from the requirements of the final 
rule. Thus, the Bureau disagrees with commenters' conclusion that 
proposed Sec.  1092.202(g) or Sec.  1092.203(f) would be unworkable or 
inappropriate in the context of determining coverage of entities 
affiliated or potentially affiliated with tribes. In any event, if 
entities are excluded from the definition of ``covered nonbank'' 
because they are part of a State and thus not subject to the rule,\344\ 
they are not required to file notifications of that status under either 
good-faith notification provision in the final rule (Sec.  1092.202(g) 
or renumbered Sec.  1092.204(f)). Nor would a decision not to file a 
voluntary good-faith notification change or enlarge the coverage of the 
rule. The entity has the choice to file such a notice, knowing that if 
its filing is not frivolous, then, as described above, it will not be 
subject to enforcement action on a retroactive basis if the Bureau 
later disagrees with the entity's good-faith position.\345\
---------------------------------------------------------------------------

    \342\ See, e.g., CFPB v. Cash Call, 35 F.4th 734, 743-45 (9th 
Cir. 2022) (upholding district court decision in agreement with 
Bureau determination that lender did not have requisite relationship 
with a tribe for Tribal law to apply).
    \343\ This section of the final rule excludes from the 
definition of the term ``covered nonbank'' a ``State,'' as defined 
in 12 U.S.C. 5481(27)--a term that includes ``any federally 
recognized Indian tribe, as defined by the Secretary of the 
Interior'' under section 104(a) of the Federal Recognized Indian 
Tribe List Act of 1994, 25 U.S.C. 5131(a).
    \344\ As described in the proposal (88 FR 6088 at 6120) with 
respect to Sec.  1092.202(g), the Bureau would permit entities to 
file notifications of non-registration under that section when they 
have a good faith basis to believe that they do not qualify as a 
``covered nonbank'' because they constitute part of a ``State,'' as 
that term is defined in CFPA section 1001(27). Entities could 
similarly file good faith notifications under final Sec.  
1092.204(f) for the same reason.
    \345\ Under the final rule, when an entity makes a non-frivolous 
filing under Sec.  1092.202(g) or Sec.  1092.204(f), the Bureau will 
not bring an enforcement action based on the entity's failure to 
comply with Sec.  1092.202 or Sec.  1092.204 unless the Bureau has 
first notified the person that the Bureau believes the person does 
in fact qualify as a covered nonbank or supervised registered entity 
(as applicable), or the order is a covered order, and has 
subsequently provided the person with a reasonable opportunity to 
comply with Sec.  1092.202 or Sec.  1092.204, as applicable.
---------------------------------------------------------------------------

    Moreover, the Bureau disagrees that this rulemaking is the 
appropriate context in which to issue a determination as to the scope 
of sovereign immunity or as to what type of ownership or association 
with a Tribal government will cause an entity to fall within the scope 
of the categories established by Congress in the CFPA. The Bureau will 
reach determinations in any particular case upon review of the 
information before it at that time. As stated in the notice of proposed

[[Page 56096]]

rulemaking, the Bureau's failure to respond to a good-faith notice 
``should not be misapprehended as Bureau acquiescence in the filer's 
assertions in the notice.'' \346\
---------------------------------------------------------------------------

    \346\ 88 FR 6088 at 6120.
---------------------------------------------------------------------------

    The Tribal commenters expressed concern regarding publication of 
information with respect to good-faith notifications submitted under 
proposed Sec. Sec.  1092.202(g) and 1092.203(f). The Bureau is 
finalizing the definition of ``administrative information'' at Sec.  
1092.201(a) to expressly provide for the treatment of good-faith 
notifications as administrative information. As discussed in the 
section-by-section analysis of that definition above, good-faith 
notifications qualify as administrative information, which is excluded 
from the publication provisions in Sec.  1092.205. Thus, contrary to 
commenters' concerns, the Bureau disagrees that filing a Sec.  
1092.202(g) or Sec.  1092.204(f) notification in good faith will lead 
to publication of the notification under the final rule, exposing a 
tribe to frivolous private litigation or improperly involving the 
Bureau in third-party claims regarding Tribal sovereignty.
    The Bureau finalizes its preliminary conclusion in the proposal 
\347\ that obtaining good-faith notifications may assist the Bureau in 
better understanding how potentially regulated entities interpret the 
scope of Sec.  1092.202, and concludes the same with respect to Sec.  
1092.204. The Bureau wishes to be informed about entities' 
interpretations of Sec. Sec.  1092.202 and 1092.204. The Bureau 
declines to adopt the proposed alternative recommended by Tribal 
commenters, which would allow entities to claim a good-faith defense to 
any action enforcing the rule's requirements without needing to file a 
good-faith notification. The proposed alternative would not provide the 
Bureau with information regarding the number of entities that might be 
asserting such a good-faith exemption or provide the means for the 
Bureau to follow up with any questions. It would fail to notify the 
Bureau of the existence of the entity, its views of whether it is a 
covered nonbank or supervised registered entity, or how to contact it. 
The Bureau finalizes its preliminary conclusion in the proposal that 
this alternative is not preferable to the good-faith notification 
option set forth in Sec. Sec.  1092.202(g) and 1092.204(f).
---------------------------------------------------------------------------

    \347\ 88 FR 6088 at 6120-21.
---------------------------------------------------------------------------

    The Bureau concludes that it is appropriate to include provisions 
in the final rule requiring a person to promptly comply with the rule's 
requirements upon becoming aware of facts or circumstances that would 
not permit it to continue representing that it has a good-faith basis 
to believe that it is not a covered nonbank or supervised registered 
entity, as applicable, or that an order in question is not a covered 
order. The Bureau concludes that it is necessary to include these 
provisions in order to account for changing or previously unknown facts 
or circumstances that might render previously filed good-faith 
notifications incorrect or obsolete, and to maintain the ongoing 
accuracy of the information maintained in the nonbank registry. The 
Bureau does not believe that these requirements are vague, unclear, or 
impose on Tribal sovereign immunity. Notifications may be filed only 
where the entity has the applicable good-faith belief. The Bureau 
believes it is appropriate to require the entity to consider whether 
any subsequent cases, regulatory orders, complaints, or other matters 
may affect the accuracy of its notifications to the Bureau.
Final Rule
    For the reasons set forth above and in the description of the 
proposal, the Bureau is finalizing Sec.  1092.202(g) as proposed, with 
two minor revisions for clarification.\348\ Proposed Sec.  1092.202(g) 
had referred to a person's good-faith basis to believe that ``an order 
in question does not qualify as a covered order,'' whereas proposed 
Sec.  1092.203(f) had referred to a person's good-faith basis to 
believe that ``an order in question is not a covered order.'' The 
Bureau does not intend these two slightly different phrases to mean 
different things. The Bureau is adopting revisions to Sec.  1092.202(g) 
in the two places where this phrase had occurred to refer to a person's 
good-faith basis to believe that ``an order in question is not a 
covered order.''
---------------------------------------------------------------------------

    \348\ See also the section-by-section discussions of Sec.  
1092.101(d) and (e) above regarding the Bureau's adoption of the 
revised terms ``nonbank registry'' and ``nonbank registry 
implementation date.''
---------------------------------------------------------------------------

Section 1092.203 Optional One-Time Registration of NMLS-Published 
Covered Orders

Section 1092.203(a) One-Time Registration Option
Proposed Rule
    The proposal would have required each covered nonbank that is 
identified by name as a party subject to a covered order described in 
proposed Sec.  1092.202(a) to register as a registered entity with the 
NBR system in accordance with proposed Sec.  1092.202 if it is not 
already so registered, and to provide or update, as applicable, the 
information described in subpart B in the form and manner specified by 
the Bureau. The proposal would also have required submission of written 
statements by supervised registered entities in connection with such 
covered orders as provided in proposed Sec.  1092.203. Proposed Sec.  
1092.204 would have required the Bureau to make certain information 
submitted to the NBR system available to the public by means that would 
have included publishing it on the Bureau's publicly available internet 
site within a timeframe determined by the Bureau in its discretion.
Comments Received
    In connection with proposed Sec.  1092.102(b), the Bureau sought 
comment on the types of coordinated or combined systems that would be 
appropriate under CFPA sections 1022(c)(7)(C) and 1024(b)(7)(D) and the 
types of information that could be obtained from or provided to State 
agencies.
    Multiple commenters stated that the proposed registry was redundant 
with existing registries and other published information, while several 
consumer advocate commenters stated that the proposed registry would 
not be redundant because no existing registry would be equivalent. For 
ease of reference, the Bureau is describing these comments and the 
Bureau's responses thereto in this part. Most of these commenters, 
including the SBA Office of Advocacy, stated or suggested that the 
collection and publication of the information described in the proposal 
was particularly duplicative of the requirements imposed upon covered 
nonbanks that are registered under the NMLS. Commenters stated that, in 
light of the redundancy with existing registries and other sources of 
information, the Bureau should not finalize the proposal or at least 
should reconsider the creation of the proposed registry.
    Industry and consumer advocate commenters agreed with the Bureau's 
statements in the proposal about the need for a new Bureau registry for 
nonbank entities that are subject to the Bureau's jurisdiction and that 
are subject to certain agency and court orders. Commenters urged the 
Bureau to register various specific types of nonbanks, including 
nonbank mortgage lenders, fintech companies, and student financing 
companies. Commenters also stated that the registry was particularly 
important since nonbanks are increasing their market share and 
otherwise becoming increasingly relevant in the

[[Page 56097]]

markets for consumer financial products and services. Industry and 
consumer advocate commenters stated that there was a dearth of 
information about nonbank financial companies, including their number 
and type and the practices they engage in. An industry commenter 
stressed the importance of ensuring consumers are protected when they 
engage with both banks and nonbanks in seeking consumer financial 
products and services.
    A consumer advocate commenter agreed that the Bureau, in 
administering the nonbank registry, should rely on information an 
entity previously submitted to the registry under part 1092 and 
coordinate or combine systems with State agencies, as provided in 
proposed Sec.  1092.102(b). The commenter stated that not only would 
this provision allow for more efficient implementation of the registry 
by avoiding duplicative or redundant efforts but would also reflect the 
importance of this registry to both Federal and State regulators, and 
that the Bureau should consider coordination with existing State 
consumer financial protection agencies.
    A joint comment from State regulators stated that a significant 
share of covered orders on the proposed registry are currently reported 
in NMLS, which the comment described as currently the most 
comprehensive registry of nonbank financial services providers. The 
joint comment stated that in particular there was reason to believe a 
significant share of the covered order information captured by the 
proposed registry for supervised registered entities was likely already 
available in NMLS Consumer Access. The comment expressed particular 
concern with respect to the confusion that might be generated when 
consumers compared the information on the proposed registry with the 
information available on the NMLS Consumer Access website. The joint 
comment stated that consumers visiting either the proposed Bureau 
registry or NMLS Consumer Access might be confused as to why they were 
unable to locate information on certain companies on one site and not 
the other. The joint comment also voiced concern that identical or 
similar information on the same company published in different formats 
by different online tools may frustrate consumers looking for critical 
financial services information.
    The joint comment also stated that NMLS Consumer Access includes 
information on actions related to violations of covered consumer 
protection laws as well as actions related to licensing or 
administrative violations that would not be covered under the proposal. 
Therefore, the comment stated, NMLS provides consumers with a more 
complete picture of nonbank enforcement actions than would be provided 
by the proposed Bureau registry. The joint comment stated that if the 
Bureau chose to proceed, the Bureau should exempt companies from the 
requirement of filing a public order if the order is already published 
on the NMLS Consumer Access website. Other commenters similarly stated 
that the Bureau should consider exempting companies from the rule's 
requirements for orders that are already published or available via 
NMLS or should otherwise create a safe harbor for entities that comply 
with NMLS reporting requirements.
    Commenters also made various other arguments and observations 
related to the NMLS, including that the proposed registry would be 
largely duplicative of the NMLS or not necessary in light of the 
existence of the NMLS, that NMLS operates in much the same way as the 
proposed registry, that the NMLS includes most of the data the Bureau 
would be looking to collect in the nonbank registry about covered 
orders, that the Bureau should more closely tailor the rule to the 
NMLS's requirements to avoid duplication, or that, by failing to use or 
rely on the information on the public-facing NMLS website, the Bureau 
was not coordinating with State bank regulatory authorities to minimize 
regulatory burden. In particular, industry commenters discussed the 
NMLS Company Form (Form MU1) submitted by nonbanks under the NMLS, 
which commenters stated includes a requirement to provide information 
regarding enforcement actions within the past 10 years. One industry 
commenter pointed out that the Form MU1 requires the submission of an 
attestation by an employee or officer and stated that, although the 
language of this attestation is different from the Bureau's proposal, 
the intent and purpose are similar, and the Bureau could rely on the 
attestation in the Form MU1 rather than the proposed written statement; 
another industry commenter similarly stated that the Bureau should be 
able to rely on the attestations provided through NMLS filings.
    In addition, during the Bureau's interagency consultations on the 
proposed and final rule as described in part V above, certain 
consulting parties expressed similar concerns regarding overlap and 
duplication between the proposed NBR system and NMLS Consumer Access.
    Commenters also identified other registries or sources of 
information regarding agency or court orders that they stated made the 
Bureau's proposal redundant or unnecessary, or stated that the Bureau 
should not finalize the proposal in light of the existence of such 
other sources of information. Commenters pointed to the websites and 
registries maintained by individual Federal and State agencies, the 
Federal Trade Commission's Sentinel database and Banned Debt Collectors 
list, information maintained by the Better Business Bureau, the 
Bureau's own Consumer Response portal and database, information posted 
by the U.S. Department of Housing and Urban Development, information 
published in connection with lawsuits, and databases listing public 
reprimands of credit unions associated with credit union service 
organizations (CUSOs). Commenters also stated that the Bureau would be 
able to obtain adequate information from other regulators under its 
information-sharing memorandums of understanding (MOUs) with those 
regulators.
Response to Comments Received
Description of Option Adopted Under Sec.  1092.203
    After considering the arguments by commenters, the Bureau is 
adopting a one-time registration option excepting entities from other 
requirements of the rule, including the proposed written-statement 
requirements, for orders that are published on the NMLS Consumer Access 
website. The NMLS Consumer Access website currently makes available for 
public viewing, subject to certain terms and conditions of access, 
certain information regarding companies that are regulated by State 
agencies in connection with a variety of financial services industries, 
including information regarding administrative and enforcement actions 
against such companies.\349\
---------------------------------------------------------------------------

    \349\ See NMLS, ``Information About NMLS Consumer Access'' 
(September 9, 2016), at https://mortgage.nationwidelicensingsystem.org/about/Documents/InformationAboutNMLSConsumerAccess.pdf.
---------------------------------------------------------------------------

    The Bureau agrees with commenters that it is consistent with the 
purposes of the final rule to adopt such a limited exception. This 
exception will reduce burden on entities that are subject to the rule, 
help avoid confusion, and promote coordination with the States in 
exercising the Bureau's nonbank registration authorities by leveraging 
information already gathered and published by the States. Section 
1092.203 of the final rule provides an

[[Page 56098]]

option for covered nonbanks to submit limited information regarding 
such covered orders in substitution of submitting filings about such 
covered orders to the Bureau-maintained nonbank registry under the 
rule's other provisions. To provide for this option, the Bureau is 
adopting new Sec.  1092.203 as well as related new definitions for the 
terms ``NMLS'' and ``NMLS-published covered order.''
    Covered nonbanks will have the option to either register under 
Sec.  1092.203 with respect to any applicable NMLS-published covered 
order(s) or to comply with the general registration requirements of 
subpart B with respect to such order(s). Covered nonbanks may opt to 
register under the one-time registration provision for all, some, or 
none of the applicable NMLS-published covered orders to which they are 
subject.\350\ Covered nonbanks that exercise this option with respect 
to an NMLS-published covered order will be required to submit certain 
limited information to the nonbank registry regarding the covered order 
to enable the Bureau to coordinate the nonbank registry with the NMLS. 
Upon exercising this option and submitting the required information 
about the NMLS-published covered order, the covered nonbank will have 
no further obligation under subpart B to provide information to, or 
update information provided to, the nonbank registry regarding the 
NMLS-published covered order.
---------------------------------------------------------------------------

    \350\ An entity that wishes to confirm that any particular 
covered order is published on the NMLS Consumer Access website may 
either review the information on the NMLS Consumer Access website in 
a manner consistent with any terms of use or other conditions on 
access that may be imposed by the NMLS's operator, or verify that 
information by contacting the State regulator that issued the order 
or the NMLS's operator directly.
---------------------------------------------------------------------------

    The Bureau intends to notify users of the nonbank registry 
regarding the existence of NMLS-published covered orders and the 
covered nonbanks that are subject to them by publishing under Sec.  
1092.205 relevant information about the applicable covered nonbank and 
covered order that the Bureau collects under Sec.  1092.203. Such users 
may then, subject to any terms of use or other conditions of access 
that the NMLS's operator may impose, view a copy of the order on the 
NMLS Consumer Access website, as well as any information about the 
applicable covered nonbank that may be maintained and published there.
Continued Need for Bureau's Nonbank Registry That Applies to All 
Covered Orders and Covered Nonbanks
    The one-time registration option in Sec.  1092.203 will complement 
the nonbank registry. The Bureau agrees with the commenters asserting 
that there is a need for a new Bureau registry with respect to covered 
orders issued against nonbank covered persons. As described in part IV 
above, the final rule will assist the Bureau in monitoring for risks to 
consumers in the offering or provision of a wide range of consumer 
financial products or services and will impose registration 
requirements on a wide range of nonbank covered persons subject to the 
Bureau's jurisdiction. The nonbank registry will accomplish this goal 
by assisting the Bureau in having access to relevant information 
regarding applicable covered nonbanks and covered orders even where 
information regarding those entities and orders is not available 
through the NMLS. The Bureau's registry will also help ensure that the 
Bureau is provided with information about such covered orders as they 
are issued across multiple product markets and geographies and in 
connection with the wide range of consumer financial products and 
services regulated by the Bureau. Thus, there remains a need for the 
Bureau to adopt its own new nonbank registry in order to provide the 
Bureau with information necessary to support its functions under the 
CFPA. In addition, for the reasons discussed in part IV(F) and the 
section-by-section discussion of Sec.  1092.205 below, the Bureau 
intends to publish certain information submitted to its new nonbank 
registry.
The Adopted Exception for NMLS-Published Covered Orders Will Reduce 
Burden on Registered Entities and Implement the CFPA and Sec.  
1092.102(b) by Coordinating With State Agencies
    The Bureau is adopting the option set forth in Sec.  1092.203 in 
part to reduce burden on entities that are subject to the final rule. 
The Bureau's adoption of Sec.  1092.203 lowers the cost to firms of the 
final rule relative to the proposed rule. For entities with NMLS-
published covered orders, exercising this option should take even less 
employee time than registering under the other provisions of the rule. 
As described further below, the Bureau believes that this option will 
advance the purposes described herein while imposing less cost on 
entities subject to the final rule.
    The Bureau is also finalizing this option in part to implement the 
approach described in the proposal in discussing proposed Sec.  
1092.102(b). There, the Bureau proposed that in administering the NBR 
system, the Bureau may coordinate or combine systems in consultation 
with State agencies as described in CFPA sections 1022(c)(7)(C) and 
1024(b)(7)(D).\351\ Section 1092.203 is consistent with the Bureau's 
statutory mandates under these provisions to consult with State 
agencies regarding requirements or systems (including coordinated or 
combined systems for registration) in developing and implementing 
registration requirements under CFPA sections 1022(c)(7)(C) and with 
respect to supervisory requirements adopted under CFPA section 
1024(b)(7)(D). CFPA section 1022(c)(7)(C) states: ``In developing and 
implementing registration requirements under [CFPA section 1022(c)(7)], 
the Bureau shall consult with State agencies regarding requirements or 
systems (including coordinated or combined systems for registration), 
where appropriate.'' \352\ Similarly, CFPA section 1024(b)(7)(D) 
states: ``In developing and implementing requirements under [CFPA 
section 1022(b)(7)], the Bureau shall consult with State agencies 
regarding requirements or systems (including coordinated or combined 
systems for registration), where appropriate.'' Section 1092.203 will 
enable the Bureau to develop and implement the registration 
requirements of the rule adopted in part under CFPA section 1022(c)(7), 
as well as the written-statement requirements adopted under CFPA 
section 1024(b)(7), in a manner that allows for ``coordinated'' and 
``combined'' systems for registration as indicated under these 
statutory provisions. As indicated by the consumer advocate commenter 
with respect to proposed Sec.  1092.102(b), coordinating or combining 
systems with State agencies as provided in Sec.  1092.102(b) of the 
final rule not only allows for more efficient implementation of the 
registry by avoiding duplicative or redundant efforts but also reflects 
the importance of this registry to both Federal and State regulators. 
In addition, Sec.  1092.203's option for one-time registration in lieu 
of filing annual written statements is consistent with Sec.  
1092.102(b) and with the Bureau's statutory mandate to consult with 
State agencies in developing and implementing requirements adopted 
under CFPA section 1024(b)(7), including Sec.  1092.204's written-
statement requirements.
---------------------------------------------------------------------------

    \351\ 88 FR 6088 at 6103.
    \352\ 12 U.S.C. 5512(c)(7)(C).

---------------------------------------------------------------------------

[[Page 56099]]

    Notifications submitted by covered nonbanks under Sec.  1092.203(b) 
will alert the Bureau to the existence of the order and the relevant 
covered nonbank, and to the publication of the order on the NMLS 
Consumer Access website. Should the Bureau desire to learn more about 
any particular NMLS-published covered order, including information 
about violations identified by State agencies, it may do so through the 
NMLS or by contacting relevant State agencies for additional 
information, including under the relevant provisions of the CFPA and 
applicable information-sharing agreements. Thus, the option adopted at 
Sec.  1092.203 will promote coordination with State agencies in 
connection with the nonbank registry.
The Adopted Exception for NMLS-Published Orders Appropriately Addresses 
the Bureau's Current Need for Information Regarding Applicable Orders 
and Companies
    The Bureau is also providing this option for covered nonbanks in 
recognition of the Bureau's extensive experience with the NMLS, the 
information that currently is collected under the NMLS, the Bureau's 
access to the NMLS, and the public's access to the NMLS Consumer Access 
website (subject to any applicable terms of use or other conditions). 
The Bureau concludes that at this time it currently needs to collect 
only limited information from covered nonbanks about covered orders 
that are published by State agencies on the NMLS Consumer Access 
website. Under the final rule, a covered nonbank subject to a covered 
order that is published on the NMLS Consumer Access website will have 
the option to instead notify the Bureau's nonbank registry that the 
order is so published and to provide certain limited information about 
itself and the covered order to the Bureau's nonbank registry. In 
general, applicable State regulators submit certain information to the 
NMLS and keep that information updated, which will help to ensure the 
information's accuracy and timeliness. Furthermore, as argued by 
commenters, covered nonbanks are generally subject to legal obligations 
to provide truthful and accurate submissions to their State regulators, 
and the States regularly post information to NMLS and help ensure the 
accuracy of the information published there. In light of these 
considerations, the Bureau concludes that the information about covered 
orders that is available via the NMLS is relatively more likely to be 
reliable and up to date than information maintained on systems that are 
not similarly used, maintained, and monitored by State agencies.
    Adopting the one-time registration option will provide the Bureau 
with much of the information about covered orders and the nonbank 
entities that are subject to them that the Bureau proposed to collect 
under the proposed rule. The Bureau acknowledges that, by providing 
this option, the nonbank registry will not contain all of the 
information about covered orders that it would have contained under the 
Bureau's registry as described in the proposed rule. However, the 
Bureau believes that the adoption of Sec.  1092.203 will provide a 
number of significant benefits to the Bureau and to covered nonbanks. 
While this approach under the final rule means that the Bureau will 
likely need to review two different systems in order to obtain complete 
information regarding all covered orders, the additional option adopted 
under the final rule will facilitate those efforts. Importantly, the 
information collected under Sec.  1092.203 will notify the Bureau 
regarding the existence of covered orders and the covered nonbanks that 
are subject to them. This limited filing will notify the Bureau 
regarding the covered nonbank's existence and the existence of the 
covered order, and will enable the Bureau to obtain more information 
about the covered nonbank and the covered order, should it so choose, 
through other means, including through the Bureau's own access to the 
information stored on NMLS as well as through other direct 
communications with applicable State agencies.
    The Bureau also concludes that it does not need to impose Sec.  
1092.204's annual written statement requirements in connection with 
NMLS-published covered orders in cases where the applicable covered 
nonbank has filed a one-time registration under Sec.  1092.203. By 
submitting information under Sec.  1092.203, the supervised registered 
entity will notify the Bureau regarding the covered nonbank's existence 
and the existence of the covered order. The Bureau, based on its 
extensive experience with the NMLS, has determined for purposes of this 
final rule that once it has been so notified of the existence of a 
covered nonbank and an applicable NMLS-published covered order, it 
generally will be able to obtain sufficient information through the 
NMLS and the State authorities participating in that system so as to 
render annual written statements under this final rule in connection 
with such an order unnecessary. Under the CFPA provisions that provide 
for sharing of supervisory information among the Bureau and State 
agencies,\353\ as well as under its standing information-sharing 
agreements with the Conference of State Bank Supervisors (CSBS) and 
individual State agencies, the Bureau anticipates that it will be able 
to obtain information to inform its supervisory prioritizations and 
activities.
---------------------------------------------------------------------------

    \353\ See 12 U.S.C. 1022(c)(6), 1024(b)(3).
---------------------------------------------------------------------------

    In particular, as discussed by several commenters, many covered 
nonbanks that are licensed by State regulators through the NMLS submit 
the NMLS Company Form MU1 in connection with various matters relating 
to their State licenses. The NMLS currently uses the Form MU1 as its 
universal licensing form for companies to apply for and maintain 
nondepository, financial services licenses from State agencies 
participating on NMLS. As discussed by commenters, the current version 
of Form MU1 requires licensed entities to provide information to State 
regulators about a variety of matters, including information about 
orders entered against the entity in connection with a financial 
services-related activity and about violations of financial services-
related regulations or statutes.\354\ Also as discussed by commenters, 
Form MU1 requires the submission of an attestation by an authorized 
representative regarding the accuracy of the information submitted. If 
the Bureau wants information relevant to the covered nonbank's 
compliance with covered orders identified on the Form MU1, the Bureau 
generally can obtain such information for its internal use through its 
statutory authorities and its information-sharing agreements with CSBS 
and the relevant State authorities. Although Form MU1 itself may not 
provide the Bureau with information about compliance with a covered 
order, the Bureau is willing to accept some reduced convenience in 
order to reduce regulatory burden and promote coordination with the 
States with respect to NMLS-published covered orders. Thus, it is not 
necessary at this time for the nonbank registry to collect annual 
statements under Sec.  1092.204 with respect to an NMLS-published 
covered order from a supervised registered entity that opts to submit a 
filing under Sec.  1092.203 in connection with that NMLS-published 
covered order.
---------------------------------------------------------------------------

    \354\ See NMLS Resource Center, https://mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx. A commenter noted that entities must promptly file 
updates to their MU1 disclosures as needed.

---------------------------------------------------------------------------

[[Page 56100]]

The Adopted Exception for NMLS-Published Covered Orders Appropriately 
Addresses the Current Need To Provide Relevant Information to Other 
Users of the Bureau's Registry
    In addition, as described in part IV(F) above and in the section-
by-section discussion of Sec.  1092.205 below, the Bureau intends to 
publish certain limited information about the entity and the order as 
obtained under Sec.  1092.203, for the purpose of notifying other 
regulators and other users of the nonbank registry about the entity's 
existence and the existence of the covered order. Users of the 
information published under Sec.  1092.203 will then have the option, 
where doing so is consistent with any NMLS Consumer Access terms of use 
or other applicable conditions, to review the information that is 
published on the NMLS Consumer Access website about the covered order 
and the covered nonbank.
    While the NMLS does not contain registration information regarding 
all of the covered nonbanks that are likely to be subject to the final 
rule, and does not publish all of the information that the Bureau will 
collect and intends to publish under the rule, the Bureau believes 
that, on the whole, the information about NMLS-published covered orders 
made available to the public on the NMLS Consumer Access website 
(subject to any applicable terms of use or other conditions) currently 
satisfies many of the goals of publication that the Bureau described in 
its proposal. These goals include making information about covered 
nonbanks and the covered orders to which they are subject readily 
accessible in a comprehensive and collected manner. As stated by 
commenters, the NMLS Consumer Access website currently publishes a wide 
range of information regarding those covered nonbanks that are subject 
to applicable State licensing and registration requirements, including 
much of the identifying information that would be collected under the 
proposal, such as the entity's legal name, business address, and NMLS 
identifier. The NMLS Consumer Access website is currently searchable by 
name, company, city, State, ZIP code, NMLS identification, and/or 
license number (subject to any applicable terms of use or other 
conditions). The NMLS Consumer Access website also currently publishes 
much of the same information that would have been collected and 
published under the proposal with respect to covered orders--in 
particular, a copy of the order and relevant information about the 
agency that issued or obtained the order. Therefore, where the Bureau 
publishes information on its nonbank registry informing users of that 
system about the existence of a covered nonbank and the issuance of an 
applicable order against that nonbank, users can (subject to NMLS 
Consumer Access's terms of use or other applicable conditions) obtain 
related information from the NMLS Consumer Access website, including 
much of the same information about the covered nonbank and covered 
order that would have otherwise been available via the proposed nonbank 
registry. In addition, many users of the nonbank registry--in 
particular, many State regulators--have their own access to the NMLS 
system and may use that access to obtain additional information about 
the company, beyond what is available through the NMLS Consumer Access 
website.
    As stated in the joint comment by State regulators, the one-time 
registration option provided in the final rule will also help minimize 
company, consumer, and other public user confusion when utilizing both 
NMLS Consumer Access and the nonbank registry. First, consumers and 
other users of the nonbank registry will have the ability to review any 
information about the order that is published in the nonbank registry 
(whether from the limited filing under Sec.  1092.203 or a more 
detailed filing under Sec.  1092.202) as well as any information 
published on the NMLS Consumer Access website (subject to any 
applicable terms of use or other conditions of access), and will be 
able to associate the NMLS Consumer Access website and the Bureau's 
nonbank registry. Thus, users will have a mechanism to identify and 
associate the information provided in both the NMLS Consumer Access 
website and the Bureau's nonbank registry about that company and any 
relevant covered orders. Second, publication of the limited information 
obtained under Sec.  1092.203 as provided under Sec.  1092.205 will 
help clarify the identity of the applicable covered nonbanks and the 
covered orders they are subject to, and otherwise reduce confusion 
about the information published on the NMLS Consumer Access website and 
the Bureau's nonbank registry. Thus, the option provided under Sec.  
1092.203 will help reduce the redundancies identified by commenters 
while maintaining the integrity and usefulness of the nonbank registry.
Response to Comments Received Regarding Redundancies With Other 
Registries and Sources of Information
    The Bureau believes that the NMLS represents a uniquely useful 
complement to the nonbank registry. The Bureau disagrees with 
commenters that the other sources of information identified by 
commenters diminish the need for the nonbank registry, or that the rule 
should accept registration of covered orders under those sources in 
lieu of registration with the nonbank registry. As stated above in part 
IV(B), although referrals from and other information provided by other 
agencies have been valuable to the Bureau's work, the Bureau currently 
often relies on other agencies to take proactive steps to contact it. 
Having access to a centralized list of orders entered against nonbanks 
will significantly increase the Bureau's ability to monitor the market 
so that the Bureau can identify, better understand, and ultimately, 
prevent further consumer harm. The Bureau disagrees that the indirect 
method proposed by commenters would be as efficient or effective as 
requiring covered nonbanks to directly submit information to the 
Bureau. Similarly, requiring the Bureau to proactively reach out and 
obtain information under its information-sharing memorandums of 
understanding with other regulators without creating its own registry 
would be an inadequate substitute for the final rule.
    The Bureau disagrees that simply steering users to the various 
other public-facing websites and registries maintained by other Federal 
agencies, State regulators, State attorneys general, and local agencies 
would serve the purposes of the final rule.\355\ First, such an 
approach would be confusing and inefficient for the Bureau and for 
other users of the public registry the Bureau intends to establish, who 
would need to become proficient at searching and otherwise using the 
various websites maintained by multiple Federal agencies, State 
regulators, State attorneys general, and local agencies in order to 
locate applicable information about covered orders and covered 
nonbanks. The sheer number of such websites would present an obstacle 
to obtaining full information about all of the covered orders that have 
been issued against the covered nonbank. Collecting, keeping track of, 
and verifying

[[Page 56101]]

information maintained on a wide range of uncoordinated Federal, State, 
and local agency websites would be highly inefficient for the Bureau 
and other users of the nonbank registry. Such an approach would also 
impair the accuracy of the information maintained by the nonbank 
registry. The various websites publishing such orders would be subject 
to various approaches to maintaining and updating information about the 
applicable entities and orders listed on them, including the frequency 
at which such information is published and updated. In addition, the 
external web page(s) to which the Bureau directs users for more 
information regarding an order might be changed or otherwise become 
outdated. By contrast, currently the NMLS Consumer Access website 
generally maintains updated and consolidated information about entities 
and orders that are listed on it.
---------------------------------------------------------------------------

    \355\ The Bureau also disagrees that the Bureau's own Consumer 
Response portal renders the nonbank registry unnecessary. To the 
contrary, the Bureau's consumer response function will be informed 
by the increased monitoring of risks and trends provided by the 
nonbank registry.
---------------------------------------------------------------------------

    Second, because the information maintained by such a variety of 
agencies would necessarily vary in format and presentation, it would be 
very challenging for the Bureau to regularly monitor, search, and link 
to the appropriate selection of orders on the registry that the Bureau 
would deem relevant to its jurisdiction. Such websites may not provide 
information about nonbanks and orders in a uniform manner that will 
enable the Bureau to easily locate and access that information.
    Third, the final rule, unlike the alternative information sources 
suggested by commenters, is calibrated to collect information relevant 
to the Bureau's exercise of its authorities. Even where another agency 
publishes a particular order against a covered nonbank, it may not be 
self-evident to the Bureau that the covered nonbank is a covered 
nonbank--information that would be provided in the nonbank registry. 
The Bureau currently lacks access to any comprehensive list of covered 
nonbanks, and thus may not even be aware of such entities or that it 
should monitor orders issued against them. Also, neither the orders 
themselves nor the relevant website publishing those orders would 
necessarily provide sufficient information to permit the Bureau to 
recognize that the order was a covered order. For example, it may not 
be clear from the face of the order the extent to which the violations 
of law found or alleged in the order arose out of conduct in connection 
with the offering or provision of a consumer financial product or 
service. Thus, the information that would be collected by the Bureau 
either by solely linking to a host of multiple other websites or by 
reaching out under its information-sharing memorandums of 
understanding, or both, would always necessarily be incomplete. Under 
such an approach, the Bureau would be required to attempt to discern on 
an ongoing basis which entities listed on another agency's website were 
subject to its jurisdiction and when they had become subject to a 
covered order. Therefore, at a minimum, the Bureau will need to be 
notified when a covered order is issued against a covered nonbank, and 
will need to be notified about the existence of the covered nonbank and 
the relevant covered order. The Bureau concludes that imposing a 
registration requirement on the covered nonbank itself to register with 
and notify the Bureau regarding such matters, as authorized under the 
CFPA, is the most effective and efficient mechanism for collecting this 
information.
    Fourth, the Bureau has concluded that it will often be difficult to 
obtain an adequate substitute for the information contained in the 
written statement with respect to covered orders that are not available 
through the NMLS. The Bureau is not currently aware of other 
regularized and consolidated official sources of information about 
covered orders that would provide the information about order 
violations that would be contained in the written statement.
    As an alternative to the approach taken in the final rule, the 
Bureau considered requiring covered nonbanks to notify the Bureau when 
they become subject to a covered order--even one not published on the 
NMLS Consumer Access website--in a manner similar to that adopted under 
Sec.  1092.203 of the final rule. Under such an alternative system, the 
Bureau might have used such notifications to attempt to obtain 
additional information about the covered nonbank and the covered order 
directly under its information-sharing memorandums of understanding 
with relevant regulators. However, such a requirement would not have 
adequately accomplished the purposes of the registry for the reasons 
explained above. Because the Bureau could not be assured that the other 
Federal, State, and local systems would routinely collect and make 
available the types of relevant identifying information about covered 
nonbanks subject to covered orders that are currently collected under 
the NMLS with respect to companies registered with the NMLS, the 
nonbank registry would therefore still need to collect such identifying 
information directly from registering nonbanks. Moreover, such an 
approach would require the Bureau to comb through a large number of 
different websites maintained by various Federal agencies, State 
regulators, State attorneys general, and local agencies, all using 
their own organization, formats, naming conventions, frequency of 
posting and updating, and other matters. Such an approach would be 
cumbersome at best not only for the Bureau but also for registering 
entities themselves. Such an approach would therefore represent a less 
efficient and effective means of accomplishing the purposes of the 
final rule, including registering applicable covered nonbanks and 
supporting the objectives and functions of the Bureau through 
monitoring markets for consumer financial products and services, than 
the approach being adopted by the Bureau under Sec.  1092.203.
    That approach is comparatively much more useful both for the Bureau 
and for other potential users of the registry. As discussed above, 
filings submitted under Sec.  1092.203 will notify both the Bureau and 
such other potential users when a covered order is issued against a 
covered person. Then the Bureau and other users will be able to use the 
NMLS to access additional information about the covered nonbank and 
covered order (subject to any applicable terms of use or other 
conditions). The NMLS and applicable State regulators generally collect 
identifying information about most of the companies that have 
applicable orders published on the NMLS Consumer Access website. For 
example, the NMLS Form MU1 requires companies to provide information 
regarding their legal name, address, NMLS number, and State licensing 
information. The Bureau will generally be able to obtain this 
information from NMLS and directly from State regulators. (While the 
Bureau understands that some covered nonbanks that are subject to an 
NMLS-published covered order may not have created an NMLS account--for 
example, where a covered order is issued against a company that is not 
appropriately licensed by an applicable State--the Bureau also 
understands that the number of such covered nonbanks is comparatively 
small. The Bureau intends to use the information collected through the 
nonbank registry to better understand the number of such companies, and 
intends to continue to consult with State agencies and the NMLS's 
operator regarding coordination of the nonbank registry and the NMLS.) 
Thus, the Bureau believes it will more readily be able to identify most 
covered nonbanks that register an NMLS-

[[Page 56102]]

published covered order than it would be able to identify covered 
nonbanks subject to other types of covered orders.
    In addition, the NMLS, which is maintained through the coordinated 
action of the States, will be relatively simple for the Bureau to 
monitor and to coordinate with. The NMLS provides a valuable 
coordination function by organizing information about registered 
nonbank companies, generally by assigning an NMLS identification number 
for the company and assembling relevant identifying and licensing 
information together in an accessible manner. Limiting the number of 
places where the Bureau will need to search in order to obtain 
information about covered nonbanks and covered orders to two--the 
nonbank registry and the NMLS--will help limit the Bureau's search 
costs, and conserve resources that it could apply elsewhere, including 
to monitor for risk to consumers in other ways. By minimizing the 
number of places such information will be located, the final rule will 
also help minimize variation in the steps that would be required to 
obtain access to the information or any controls that may be placed on 
access to the information, and the ways or formats in which that 
information may be posted. Thus, the final rule will help ensure access 
by the Bureau to more uniform and consistent reporting about covered 
nonbanks and covered orders.
    In addition to providing a consolidated source of information to 
the Bureau, the NMLS is also comparatively a more useful resource for 
other users of the public registry the Bureau intends to establish than 
a collection of other websites would be. As discussed above, where the 
Bureau publishes information on its nonbank registry informing users of 
that registry about the existence of a covered nonbank and the issuance 
of an applicable order against that nonbank, State regulators will 
generally be able to obtain related information from the NMLS pursuant 
to their arrangements with NMLS. In addition, as discussed above, the 
NMLS Consumer Access website currently publishes a wide range of 
information regarding those covered nonbanks that are subject to 
applicable State licensing and registration requirements, including 
much of the identifying information that would be collected under the 
proposal, such as the entity's legal name, business address, and NMLS 
identifier. Other users of the nonbank registry may use the NMLS 
Consumer Access website to access copies of, and other information 
about, NMLS-published covered orders and covered nonbanks that are 
registered with the NMLS, so long as that access is consistent with any 
terms of use or other conditions of access that NMLS may impose. Thus, 
the NMLS Consumer Access website provides a centralized point of access 
(subject to NMLS Consumer Access's applicable terms of use or other 
conditions of access) for persons seeking to learn more about NMLS-
published covered orders and covered nonbanks. Moreover, publication on 
the NMLS Consumer Access website will help ensure that such orders are 
presented in a format that is uniform and consistent, which will reduce 
the opportunity for confusion for persons who are attempting to locate 
and learn about NMLS-published covered orders.
    Therefore, the Bureau has determined that maintaining its own 
registry, with the alternative option for one-time registration of 
NMLS-published covered orders provided in Sec.  1092.203, will best 
serve the purposes of the final rule as described herein.
Final Rule
    For the reasons described above and as follows in this section-by-
section analysis, the Bureau is finalizing a new Sec.  1092.203, and is 
renumbering the remainder of the sections of subpart B to part 1092 
accordingly. Consistent with the approach suggested by commenters, this 
section will provide an express exception from some of the requirements 
of the rule as proposed (including the proposed written-statement 
requirements) for orders that are published on the NMLS Consumer Access 
website, which may be exercised at the option of the covered nonbank in 
lieu of registering under subpart B generally with respect to such 
orders.
    The Bureau is adopting corresponding definitions of the terms 
``NMLS'' and ``NMLS-published covered order'' at Sec.  1092.201(j) and 
(k). See the discussion of these definitions in the section-by-section 
discussion of these sections above.
    With respect to any NMLS-published covered order, a covered nonbank 
that is identified by name as a party subject to the order may elect to 
comply with the one-time registration option described in this section 
in lieu of complying with the requirements of Sec. Sec.  1092.202 and 
1092.204. Section 1092.203(c) provides that, once a covered nonbank 
avails itself of this option, and chooses to file the information 
required under Sec.  1092.203(b) with respect to an NMLS-published 
covered order, the covered nonbank shall have no further obligation 
under subpart B to provide information to, or update information 
provided to, the nonbank registry regarding the NMLS-published covered 
order.
    As discussed above, by collecting and potentially publishing 
limited information for the purpose of coordinating the nonbank 
registry with NMLS, the final rule will also promote coordination with 
States in accordance with CFPA sections 1022(c)(7)(C) and 
1024(b)(7)(D).
    As provided in Sec.  1092.201(k), no covered order issued or 
obtained at least in part by the Bureau shall be an NMLS-published 
covered order. Thus, a covered nonbank must comply with the 
requirements of Sec.  1092.202 and (where applicable) Sec.  1092.204 
with respect to a covered order that has been issued or obtained at 
least in part by the Bureau and may not elect to comply with the one-
time registration option described in Sec.  1092.203 with respect to 
such a covered order whether or not the order has been published on the 
NMLS Consumer Access website. This restriction applies whether the 
applicable covered order was issued either by a court or by the Bureau 
itself, so long as the order was issued in any action or proceeding 
brought at least in part by the Bureau. The Bureau has a special 
interest in monitoring its own orders, and in obtaining updated 
information under Sec.  1092.202 regarding them. The identifying 
information submitted under Sec.  1092.202, and the final rule's 
obligation to update that information in the event of changes, could 
provide new and useful information to the Bureau in monitoring and 
enforcing its own orders. For example, a covered nonbank subject to a 
Bureau covered order that moves its principal place of business or 
changes its name will be required to notify the Bureau. Also, the 
Bureau has a special interest in obtaining annual written statements 
under Sec.  1092.204 from supervised registered entities regarding such 
Bureau orders. The written statements will provide information 
regarding ongoing compliance with the Bureau order and the name and 
title of the attesting executive, will otherwise facilitate the 
Bureau's supervision of entities subject to its orders, and will help 
the Bureau detect and assess risks to consumers in connection with the 
orders it has issued or obtained. The Bureau also concludes that the 
rule's written-statement requirements should be imposed on supervised 
registered entities subject to covered orders that have been issued or 
obtained by the Bureau to ensure that such entities are legitimate 
entities and are able to perform their obligations to consumers. Thus, 
the final rule requires covered

[[Page 56103]]

nonbanks to comply with Sec.  1092.202 and (where applicable) Sec.  
1092.204 with respect to such covered orders whether or not they are 
published on the NMLS Consumer Access website.
Section 1092.203(b) Information To Be Provided
Proposed Rule
    See the section-by-section discussion of Sec.  1092.203(a) above 
for a discussion of the proposal's requirements regarding submission of 
information and written statements and publication of information 
relating to covered orders.
Comments Received
    See the section-by-section discussion of Sec.  1092.203(a) above 
for a summary of comments received requesting an exception for NMLS-
published covered orders as well as comments received regarding alleged 
redundancies with other registries and sources of information.
Final Rule
    For the reasons described above and as follows in this section-by-
section analysis, the Bureau is adopting a new Sec.  1092.203(b) 
requiring a covered nonbank that chooses to exercise the option 
described in Sec.  1092.203(a), in the form and manner specified by the 
Bureau, to provide such information that the Bureau determines is 
appropriate for the purpose of identifying the covered nonbank and the 
NMLS-published covered order, and otherwise for the purpose of 
coordinating the nonbank registry with the NMLS. The Bureau will 
provide instructions regarding the submission of such information in 
filing instructions issued under Sec.  1092.102(a).
    The Bureau is finalizing this requirement in order to help ensure 
that it obtains adequate information regarding NMLS-published covered 
orders to maintain the usefulness of the nonbank registry with respect 
to such orders. Without such a requirement, the Bureau may not learn 
about the existence of such orders or the applicable covered nonbank, 
or may not be informed that the covered nonbank is a covered nonbank 
subject to its jurisdiction or that the covered order is a covered 
order. Such matters are critical for the Bureau to be informed about so 
that it may understand when information regarding such matters that is 
of interest to the Bureau and relevant to its jurisdiction may be 
available from State agencies. The Bureau will also need this 
information in order to help coordinate the nonbank registry with the 
NMLS, including to verify that an applicable NMLS-published covered 
order is in fact published on the NMLS Consumer Access website and to 
obtain information regarding the applicable covered nonbank and the 
NMLS-published covered order.
    Under Sec.  1092.205 of the final rule, the Bureau intends to 
publish certain information that the nonbank registry collects under 
Sec.  1092.203. As described above and in the section-by-section 
discussion of Sec.  1092.205 below, and except as provided therein, the 
Bureau believes the publication of certain information collected under 
Sec.  1092.203 will be in the public interest, in order to allow users 
of the Bureau's public registry to identify that a covered nonbank has 
become subject to a covered order and (consistent with any applicable 
terms of use or other conditions of access) to be able to locate 
information about that covered nonbank and covered order on the NMLS 
Consumer Access website. The Bureau may also collect additional 
information under Sec.  1092.203 for the purpose of coordinating the 
nonbank registry with the NMLS that it may choose not to publish. In 
administering the nonbank registry, the Bureau will implement Sec.  
1092.203 along with Sec.  1092.102(b) as part of coordinating or 
combining systems in consultation with State agencies.
203(c) No Further Obligation To Provide or Update Information
Proposed Rule
    See the section-by-section discussion of Sec.  1092.203(a) above 
for a discussion of the proposal's requirements regarding submission of 
information and written statements and publication of information 
relating to covered orders.
Comments Received
    See the section-by-section discussion of Sec.  1092.203(a) above 
for a summary of comments received requesting an exception for NMLS-
published covered orders as well as comments received regarding alleged 
redundancies with other registries and sources of information.
Final Rule
    For the reasons described above and as follows in this section-by-
section analysis, the Bureau is adopting a new Sec.  1092.203(c) 
stating that, upon providing the information described in Sec.  
1092.203(b), the covered nonbank shall have no further obligation under 
subpart B to provide information to, or update information provided to, 
the nonbank registry regarding the NMLS-published covered order. Thus, 
once a covered nonbank has submitted the information specified in the 
filing instructions adopted under Sec.  1092.102(a) for an applicable 
NMLS-published covered order, the covered nonbank will have no further 
obligation to provide information to, or update information provided 
to, the nonbank registry regarding the NMLS-published covered order. 
Thus, among other things, following such a submission, the covered 
nonbank need not submit either an initial or a revised filing under 
Sec.  1092.202(b)(2) with respect to the NMLS-published covered order. 
(However, if the covered nonbank is also subject to at least one other 
covered order that is registered or required to be registered under 
Sec.  1092.202, and such other order(s) is not eligible for 
registration under Sec.  1092.203 or the covered nonbank has not opted 
to register the order(s) under that provision, the covered nonbank will 
remain subject to Sec.  1092.202(b)(2)'s requirements with respect to 
such other covered order(s), including the ongoing obligation to update 
its identifying information.) If the covered nonbank is a supervised 
registered entity, then, following such a submission under Sec.  
1092.203, it will not be required to submit an annual written statement 
under Sec.  1092.204 or otherwise comply with the requirements of that 
section in connection with the applicable NMLS-published covered order.
    As described in the section-by-section analysis of Sec.  
1092.203(a) above, the Bureau believes that this exception to the 
requirements of the final rule with respect to NMLS-published covered 
orders is consistent with the purposes of the final rule described in 
part IV above. This exception will reduce burden on entities that are 
subject to the rule, help avoid confusion, and promote coordination 
with the States in exercising the Bureau's nonbank registration 
authorities by leveraging information already gathered and published by 
the States.

Section 1092.204 Annual Reporting Requirements for Supervised 
Registered Entities

    Proposed Sec.  1092.203, which is renumbered in the final rule as 
Sec.  1092.204, would have required supervised registered entities 
annually to identify an executive (or executives) who is responsible 
for and knowledgeable of the firm's efforts to comply with orders 
identified in the registry. The proposal would also have required 
supervised registered entities to submit on an annual basis a written 
statement signed by that executive (or executives) regarding the 
entity's compliance with orders in the registry.

[[Page 56104]]

    The Bureau is finalizing this component of the proposal, with 
certain changes to the proposed regulatory text that are discussed 
below. Below, the Bureau first addresses comments regarding the 
Bureau's legal authority to impose the requirements in Sec.  1092.204 
and then discusses Sec.  1092.204's individual paragraphs.
Proposed Rule's Discussion of the Bureau's Legal Authority To Impose 
Written-Statement Requirements
    The Bureau relied on its rulemaking authority under CFPA section 
1024(b)(7)(A)-(C) in requiring supervised registered entities to submit 
written statements.\356\ The Bureau explained that each of those 
paragraphs provides independent authority for the requirement to submit 
written statements. First, the Bureau explained, CFPA section 
1024(b)(7)(A) and (B) authorize these written-statement requirements 
because the statements would facilitate the Bureau's supervision 
efforts and its assessment and detection of risks to consumers. The 
Bureau believed the proposed written statement would facilitate the 
Bureau's supervision efforts, including by providing the Bureau with 
important additional information regarding risks to consumers that may 
be associated with the covered order; informing the Bureau's risk-based 
prioritization of its supervisory activities under CFPA section 
1024(b); and improving the Bureau's ability to conduct its supervisory 
and examination activities with respect to the supervised nonbank, when 
it does choose to exercise its supervisory authority. The Bureau noted 
that submission of a written statement that identifies noncompliance 
with reported orders would provide the Bureau with important 
information regarding risks to consumers that may be associated with 
the order. The Bureau further noted that such orders themselves 
frequently contain provisions aimed at ensuring an entity's future 
legal compliance with the covered laws violated. The Bureau believed 
that an entity's compliance with such provisions may mitigate the 
continuing risks to consumers presented by the entity and thus the 
potential need for current supervisory activities. By contrast, the 
Bureau also believed that evidence of noncompliance with an order 
requiring registration under the proposal would be probative of a 
potential need for supervisory examination of the supervised nonbank 
and would be a relevant factor for the Bureau to consider in conducting 
its risk-based prioritization of its supervisory program under CFPA 
section 1024(b)(2), including (b)(2)(C), (D), and (E). Likewise, in 
cases where the Bureau determined to exercise its supervisory 
authorities with respect to a supervised nonbank required to submit 
written statements under the proposal, the Bureau expected that those 
written statements would provide important information relevant to 
conducting examination work. For example, the Bureau explained that it 
might use the written statements in determining what information to 
require from a supervised nonbank, in determining the content of 
supervisory communications and recommendations, or in making other 
decisions regarding the use of its supervisory authority.
---------------------------------------------------------------------------

    \356\ 12 U.S.C. 5514(b)(7)(A)-(C).
---------------------------------------------------------------------------

    Second, the Bureau explained in the proposal that it has authority 
to require preparation of the written statements under CFPA section 
1024(b)(7)(C) because the written statements will help ensure that 
supervised registered entities ``are legitimate entities and are able 
to perform their obligations to consumers.'' \357\ The Bureau 
interpreted CFPA section 1024(b)(7)(C) as authorizing it to prescribe 
substantive rules to ensure that supervised entities are willing and 
able to comply with their legal obligations to consumers, including 
those imposed by Federal consumer financial law. The Bureau believed 
that the proposed requirement to submit an annual written statement 
would help ensure that the supervised registered entity takes its legal 
duties seriously, and that it is not treating the risk of enforcement 
actions for violations of legal obligations as a mere cost of doing 
business. If an entity reported under proposed Sec.  1092.203(d)(2) 
that it violated its obligations under covered orders, the Bureau noted 
that may indicate that the entity lacks the willingness or ability more 
generally to comply with its legal obligations, including its 
obligations under the Federal consumer financial laws that the Bureau 
enforces. The Bureau believed that that would especially be the case if 
an entity reported violations under proposed Sec.  1092.203(d)(2) in 
multiple years or with respect to multiple covered orders, or if the 
violation amounted to a repeat of the conduct that initially gave rise 
to the covered order. The Bureau noted that, under CFPA section 
1024(b)(2),\358\ the Bureau may prioritize such an entity for 
supervisory examination to determine whether the entity has worked in 
good faith to maintain protocols aimed at ensuring compliance with its 
legal obligations and detecting and appropriately addressing any legal 
violations that the entity may commit. In this way, the Bureau 
explained that the written statement required by proposed Sec.  
1092.203(d)(2) would assist the Bureau in ensuring that supervised 
registered entities are legitimate entities and are able to perform 
their obligations to consumers.
---------------------------------------------------------------------------

    \357\ 12 U.S.C. 5514(b)(7)(C).
    \358\ 12 U.S.C. 5514(b)(2).
---------------------------------------------------------------------------

Certain Comments Received Regarding the Bureau's Legal Authority To 
Impose Written-Statement Requirements
    Some industry commenters questioned the Bureau's authority to 
impose the written-statement requirements, while some consumer advocate 
commenters stated that the Bureau was authorized to impose the written-
statement requirements. The Bureau finalizes its conclusion set forth 
in the proposal that CFPA section 1024(b)(7) authorizes the rule's 
written-statement requirements.\359\ The Bureau discusses and responds 
to some of these comments together in this part for ease of reference. 
For further discussion of the written-statement requirements in the 
final rule and the Bureau's responses to comments received, see the 
section-by-section analysis of Sec.  1092.204 below.
---------------------------------------------------------------------------

    \359\ See, e.g., 88 FR 6088 at 6091-93, 6125.
---------------------------------------------------------------------------

    Commenters focused primarily on the meaning of CFPA section 
1024(b)(7)(B) and 1024(b)(7)(C). Industry commenters commented that the 
proposed written statement would not qualify as a ``record'' within the 
meaning of CFPA section 1024(b)(7)(B). They also argued that section 
1024(b)(7)(B) only allows the Bureau to require a supervised entity to 
produce records, not to compel an individual executive to provide the 
required written statement. Further, an industry commenter stated that 
the written-statement requirement is not the type of rule contemplated 
by CFPA section 1024(b)(7)(C) because, in the group's view, the 
requirement does not address the competency of management or financial 
requirements to ensure an entity's solvency. Finally, commenters 
contended that Congress's express provision for certification or 
attestation requirements in other statutory provisions \360\ implies 
that the Bureau lacks the authority to impose the proposed written-
statement requirement under CFPA section 1024(b)(7) because that 
provision does not expressly address such a requirement.
---------------------------------------------------------------------------

    \360\ Commenters cited 7 U.S.C. 6s(k)(3)(B)(ii), 12 U.S.C. 
1851(f)(3)(A)(ii), 15 U.S.C. 7241(a), and 15 U.S.C. 7262(b).

---------------------------------------------------------------------------

[[Page 56105]]

The Bureau's Response to Certain Comments Received Regarding the 
Bureau's Legal Authority To Impose Written-Statement Requirements
    The Bureau finalizes its conclusion that CFPA section 1024(b)(7) 
authorizes the Bureau to impose the written-statement requirements 
contained in Sec.  1092.204. As an initial matter, commenters are wrong 
in suggesting that Congress's express provision for certification or 
attestation requirements in provisions like 7 U.S.C. 6s(k)(3)(B)(ii), 
12 U.S.C. 1851(f)(3)(A)(ii), 15 U.S.C. 7241(a), and 15 U.S.C. 7262(b) 
implies that the Bureau lacks authority to impose the written-statement 
requirement under section 1024(b)(7). The commenters appear to be 
relying on the principle articulated in Russello v. United States that 
Congress generally ``acts intentionally and purposely in the disparate 
inclusion or exclusion'' of statutory language.\361\ That principle, 
however, only applies when ``Congress includes particular language in 
one section of a statute but omits it in another section of the same 
Act.'' \362\ By contrast, ``[l]anguage in one statute usually sheds 
little light upon the meaning of different language in another 
statute.'' \363\ Therefore, 15 U.S.C. 7241(a) and 7262(b), which 
Congress enacted in the Sarbanes-Oxley Act of 2002,\364\ have little 
bearing on the proper interpretation of CFPA section 1024(b)(7).
---------------------------------------------------------------------------

    \361\ Russello v. United States, 464 U.S. 16, 23 (1983) 
(citation omitted).
    \362\ Id.
    \363\ Id. at 25.
    \364\ Public Law 107-204, 116 Stat. 745.
---------------------------------------------------------------------------

    While 7 U.S.C. 6s(k)(3)(B)(ii) and 12 U.S.C. 1851(f)(3)(A)(ii), 
like section 1024(b)(7), were enacted in the Dodd-Frank Act (albeit in 
different titles than section 1024(b)(7)), those provisions are also 
insufficient to invoke the Russello principle. That principle infers 
meaning from differences in language between statutory provisions that 
are otherwise similarly worded. Accordingly, the inference ``grows 
weaker with each difference in the formulation of the provisions under 
inspection.'' \365\ Also, the Russello principle ``applies with limited 
force'' to broadly worded statutes.\366\ The Russello principle is 
founded on the premise that ``the absence of the words used in [a 
separate statutory provision] could indicate an intention to exclude 
their application'' in the principal provision at issue.\367\ It, 
however, ``makes less sense to draw that inference when . . . the 
provision at issue uses broader language that encompasses the meaning 
of the absent words and thus did not need to expressly include them.'' 
\368\
---------------------------------------------------------------------------

    \365\ City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 
U.S. 424, 435-36 (2002); accord Clay v. United States, 537 U.S. 522, 
532 (2003); see also Nat'l Postal Policy Council v. Postal 
Regulatory Comm'n, 17 F.4th 1184, 1191 (D.C. Cir. 2021) (Russello 
presumption ``has limited force'' when ``two provisions use 
different words and are not otherwise parallel''); United States v. 
Councilman, 418 F.3d 67, 74 (1st Cir. 2005) (``[I]f the language of 
the two provisions at issue is not parallel, then Congress may not 
have envisioned that the two provisions would be closely compared in 
search of terms present in one and absent from the other.'').
    \366\ See United States v. O'Donnell, 608 F.3d 546, 552 (9th 
Cir. 2010).
    \367\ Id.
    \368\ Id.; see also Adirondack Med. Ctr. v. Sebelius, 740 F.3d 
692, 697 (D.C. Cir. 2014) (explaining that the ``expressio unius 
canon'' is a ``poor indicator of Congress' intent'' to limit the 
scope of an otherwise ``broad grant of authority''); Councilman, 418 
F.3d at 74 (``The Russello maxim . . . is simply a particular 
application of the classic principle expressio unius est exclusio 
alterius . . . .'').
---------------------------------------------------------------------------

    Applying those considerations here, 7 U.S.C. 6s(k)(3)(B)(ii) and 12 
U.S.C. 1851(f)(3)(A)(ii) provide no basis for reading into CFPA section 
1024(b)(7) an atextual limitation that would prevent the Bureau from 
imposing the written-statement requirement. The provisions do not use 
parallel wording. While 7 U.S.C. 6s(k)(3)(B)(ii) and 12 U.S.C. 
1851(f)(3)(A)(ii) focus on particular reporting requirements, CFPA 
section 1024(b)(7) provides a general grant of rulemaking authority to 
facilitate supervision, assessment, and detection of risks to 
consumers, and to ensure that supervised entities are legitimate and 
are able to perform their obligations to consumers. Further, as 
explained in greater detail below, Congress used expansive language in 
section 1024(b)(7) that encompasses the authority to impose the 
written-statement requirements. The contrast that the commenters 
attempt to draw between section 1024(b)(7) and other, more limited 
provisions imposing certification or attestation requirements does not 
support restricting section 1024(b)(7)'s breadth.
    Turning to the specific subparagraphs of CFPA section 1024(b)(7), 
no commenter specifically addressed the Bureau's statements in the 
notice of proposed rulemaking that CFPA section 1024(b)(7)(A) provides 
a ``distinct, independently sufficient basis for the proposed written-
statement requirements.'' \369\ In the absence of any comments 
specifically challenging the proposition that CFPA section 
1024(b)(7)(A) authorizes the written-statement requirements, the Bureau 
finalizes its conclusion that section 1024(b)(7)(A) supports those 
requirements. The written-statement requirements will ``facilitate [the 
Bureau's] supervision'' efforts and its ``assessment and detection of 
risks to consumers'' within the meaning of section 1024(b)(7)(A). In 
particular, the written-statement requirements will provide the Bureau 
with important additional information regarding risks to consumers that 
may be associated with the covered order; inform the Bureau's risk-
based prioritization of its supervisory activities under CFPA section 
1024(b); and improve the Bureau's ability to conduct its supervisory 
and examination activities with respect to the supervised nonbank, when 
it chooses to exercise its supervisory authority. Because CFPA section 
1024(b)(7)(A) provides a distinct grant of authority separate from CFPA 
section 1024(b)(7)(B) or 1024(b)(7)(C)--a proposition not disputed by 
any commenter--section 1024(b)(7)(A) suffices to support the written-
statement requirements, even if (as the commenters argue) the written 
statement did not qualify as a ``record'' that the Bureau could require 
under section 1024(b)(7)(B) and also was not authorized by section 
1024(b)(7)(C).
---------------------------------------------------------------------------

    \369\ 88 FR 6088 at 6090; see also id. at 6093 (``Section 
1024(b)(7) of the CFPA . . . identifies three independent sources of 
Bureau rulemaking authority.''); id. at 6125 (``Each of th[e] 
paragraphs [in CFPA section 1024(b)(7)(A)-(C)] provides independent 
authority for the requirement to submit written statements.'').
---------------------------------------------------------------------------

    Although not necessary to support the written-statement 
requirements, the Bureau also concludes that section 1024(b)(7)(B) 
authorizes those requirements as well. Section 1024(b)(7)(B) authorizes 
the Bureau to require entities subject to its supervisory authority 
``to generate, provide, or retain records for the purposes of 
facilitating supervision . . . and assessing and detecting risks to 
consumers.'' \370\ As the Bureau has explained,\371\ the term 
``records'' in section 1024(b)(7)(B) is broad. It includes any 
``[i]nformation that is inscribed on a tangible medium or that, having 
been stored in an electronic or other medium, is retrievable in 
perceivable form,'' or any ``documentary account of past events.'' 
\372\ The written statement

[[Page 56106]]

required by Sec.  1092.204 easily qualifies as a ``record'' under that 
definition. The written statement provides ``[i]nformation'' or a 
``documentary account'' of past events--namely, the fact of ``whether, 
to the attesting executive's knowledge, the supervised registered 
entity during the preceding calendar year identified any violations or 
other instances of noncompliance'' with an applicable covered order, as 
well as the steps the attesting executive undertook to review and 
oversee the supervised registered entity's activities with respect to 
the covered order. Even under commenters' preferred definitions of 
``record,'' the written statement fits the bill. It ``set[s] down in 
writing,'' ``furnish[es] written evidence'' of, and ``gives evidence 
of'' the matters required to be addressed in the written statement. It 
also ``recalls or relates past events.'' Put another way, the written 
statement provides ``a description of actions taken by the business,'' 
which commenters recognize ``might constitute a `record.' '' Because 
the written statement qualifies as a ``record,'' section 1024(b)(7)(B) 
authorizes the Bureau to require supervised nonbanks to ``generate''--
i.e., create \373\--such written statements and ``provide'' them to the 
Bureau.\374\
---------------------------------------------------------------------------

    \370\ 12 U.S.C. 5514(b)(7)(B).
    \371\ See 88 FR 6088 at 6093.
    \372\ Record, Black's Law Dictionary (11th ed. 2019); accord 
Record, Webster's Third New International Dictionary (1981) (``an 
account in writing or print (as in a document) . . . intended to 
perpetuate a knowledge of acts or events''; ``a piece of writing 
that recounts or attests to something''); Record, American Heritage 
Dictionary of the English Language, https://www.ahdictionary.com/word/search.html?q=record (``[a]n account, as of information or 
facts, set down especially in writing as a means of preserving 
knowledge'').
    \373\ See Generate, Webster's Third New International Dictionary 
(1981) (defining ``generate'' as ``to bring into existence'').
    \374\ 12 U.S.C. 5514(b)(7)(B).
---------------------------------------------------------------------------

    Contrary to commenters' assertions, Sec.  1092.204(d) does not 
require the entity to comply with covered orders, or to engage in, or 
to refrain from, other specific non-recordkeeping conduct. Rather, the 
two elements of the written statement required under Sec.  
1092.204(d)(1) and (2) are statements about facts that will already 
exist at the time the written statement is submitted--namely, the steps 
the executive took, and whether or not the entity identified any 
applicable violations. Section 1092.204(d) merely requires that the 
supervised registered entity generate and submit a record (signed by 
the attesting executive) about those existing facts.
    The commenters suggest that, because the Bureau uses the term 
``attest'' in describing the statements required to be included in the 
written statement, the document cannot qualify as a ``record.'' But 
nothing about the use of the term ``attest'' changes the substance of 
the written-statement requirements or takes the written statement 
outside the realm of the term ``records.'' ``Attest'' means to ``affirm 
to be true or genuine.'' \375\ It is common to refer to the maker of a 
record as having ``attest[ed]'' to the information contained in that 
record. Indeed, Webster's Third New International Dictionary uses the 
word ``attest'' in defining the word ``record'': The definition of 
``record'' includes ``a piece of writing that recounts or attests to 
something.'' \376\
---------------------------------------------------------------------------

    \375\ Attest, Webster's Third New International Dictionary 
(1981); accord Attest, Black's Law Dictionary (11th ed. 2019) 
(``[t]o affirm to be true or genuine''); Attest, American Heritage 
Dictionary of the English Language, https://www.ahdictionary.com/word/search.html?q=attest (``[t]o affirm to be correct, true, or 
genuine'').
    \376\ Record, Webster's Third New International Dictionary 
(1981) (emphasis added).
---------------------------------------------------------------------------

    Further, contrary to commenters' suggestion, the fact that Sec.  
1092.204(e) requires the supervised entity to ``maintain documents and 
other records sufficient to provide reasonable support'' for its 
written statement does not transform the written statement into 
something other than a ``record.'' Information contained in documents 
that constitute ``records'' is often supported by other ``records.'' 
For example, accounting journals or ledgers are ``records,'' even 
though they are often based on other ``records,'' such as receipts or 
invoices.\377\ Similarly, Sec.  1092.204(e)'s recordkeeping requirement 
does not render the written statement a non-``record.''
---------------------------------------------------------------------------

    \377\ See, e.g., 2 Robert P. Mosteller et al., McCormick on 
Evidence Sec.  287 (8th ed. 2022) (explaining that accounting 
journals or ledgers may be admissible under the hearsay exception 
for records of regularly conducted activities, even though the 
journals or ledgers are based on other records).
---------------------------------------------------------------------------

    Commenters also contend that the Bureau is exceeding its authority 
under section 1024(b)(7)(B) by imposing the requirement to submit 
written statements on individual executives. According to commenters, 
section 1024(b)(7)(B) only allows the Bureau to require a supervised 
entity to produce records; it does not allow the Bureau to require an 
executive of a supervised entity to provide any such certification. The 
commenters, however, do not accurately describe the nature of the 
requirements imposed by Sec.  1092.204 of the Bureau's rule. Section 
1092.204 imposes requirements on supervised registered entities, not on 
any particular individuals. Supervised registered entities with 
applicable covered orders must designate attesting executives who 
satisfy certain criteria, and they must submit a written statement that 
is signed by the attesting executive ``on behalf of the supervised 
registered entity.'' \378\ Those obligations belong to the supervised 
registered entity, not to any individual. If a supervised registered 
entity failed to designate an attesting executive or to submit a 
written statement when required to do so, the supervised registered 
entity--not a particular individual--would potentially be subject to an 
enforcement action. It is thus simply incorrect to suggest that Sec.  
1092.204 imposes requirements on corporate executives in their personal 
capacities. To be sure, as with any other regulatory obligation, 
supervised registered entities, like any legal entity, must take steps 
to comply with Sec.  1092.204 through their agents. But the obligations 
under Sec.  1092.204 belong to supervised registered entities, not to 
particular individuals acting in their personal capacities.
---------------------------------------------------------------------------

    \378\ Section 1092.204(b), (d).
---------------------------------------------------------------------------

    For the reasons discussed above, the Bureau does not find the 
comments challenging its reliance on section 1024(b)(7)(B) persuasive. 
The Bureau thus finalizes its conclusion that section 1024(b)(7)(B) 
authorizes Sec.  1092.204's written-statement requirements.
    In addition, the Bureau finalizes its conclusion that CFPA section 
1024(b)(7)(C) provides a distinct, independent statutory basis for 
Sec.  1092.204's written-statement requirements. Section 1024(b)(7)(C) 
authorizes the Bureau to prescribe rules to ensure that nonbanks 
subject to its supervisory authority ``are legitimate entities and are 
able to perform their obligations to consumers.'' \379\ As the Bureau 
has explained, Sec.  1092.204's written-statement requirements further 
the statutory purposes specified in section 1024(b)(7)(C) because those 
requirements will facilitate the Bureau's assessment of whether a 
company is willing and able to satisfy its legal obligations, including 
those set forth in covered orders.\380\
---------------------------------------------------------------------------

    \379\ 12 U.S.C. 5514(b)(7)(C).
    \380\ See 88 FR 6088 at 6091, 6093, 6125.
---------------------------------------------------------------------------

    In response, commenters assert that the types of requirements 
contemplated by section 1024(b)(7)(C) address the competency of 
management and financial requirements to ensure the entity's solvency, 
and according to commenters, the written-statement requirements do 
``not further either of those statutory purposes.'' As an initial 
matter, the commenters' argument fails on its own terms because Sec.  
1092.204's written-statement requirements ``address the competency of 
management.'' If an entity is violating its obligations under a covered 
order, or its executives are not taking sufficient steps to effectively 
oversee the entity's compliance with its obligations under such an 
order, that would raise concerns regarding ``the competency of [the 
entity's] management.''
    The commenters also fail to account for the full breadth of the 
language Congress used in section 1024(b)(7)(C).

[[Page 56107]]

As the Bureau has explained,\381\ the term ``obligations'' in section 
1024(b)(7)(C) encompasses ``anything that a person is bound to do or 
forbear from doing,'' including duties ``imposed by law, contract, [or] 
promise.'' \382\ Contrary to commenters' suggestion, the term 
``obligations'' is not limited to financial requirements related to 
solvency. Similarly, ``legitimate entities'' is a broad phrase 
encompassing an inquiry into whether an entity takes seriously its duty 
to ``[c]omply[ ] with the law.'' \383\
---------------------------------------------------------------------------

    \381\ See 88 FR 6088 at 6093.
    \382\ Obligation, Black's Law Dictionary (11th ed. 2019).
    \383\ Legitimate, Black's Law Dictionary (11th ed. 2019) 
(``[c]omplying with the law; lawful''); accord Legitimate, Webster's 
Second New International Dictionary (1934) (defining ``legitimate'' 
as ``[a]ccordant with law or with established legal forms and 
requirements; lawful''); Legitimate, Webster's Third New 
International Dictionary (1981) (similar).
---------------------------------------------------------------------------

    Commenters also lose sight of the purposes of the Bureau's 
supervisory program, which are ``assessing compliance with the 
requirements of Federal consumer financial law''; ``obtaining 
information about the activities and compliance systems or procedures'' 
of entities subject to Bureau supervision; and ``detecting and 
assessing risks to consumers and to markets for consumer financial 
products and services.'' \384\ The authority that Congress granted to 
the Bureau in CFPA section 1024(b)(7) must at least be sufficiently 
expansive to allow the Bureau to issue rules aimed at achieving the 
supervisory objectives listed in CFPA section 1024(b)(1). According the 
terms ``obligations'' and ``legitimate entities'' in section 
1024(b)(7)(C) their full breadth--rather than artificially restricting 
them, as commenters propose, to addressing limited issues like 
solvency--is most consistent with achieving the congressionally stated 
purposes of supervision, including ``assessing compliance with the 
requirements of Federal consumer financial law.'' \385\
---------------------------------------------------------------------------

    \384\ 12 U.S.C. 5514(b)(1).
    \385\ 12 U.S.C. 5514(b)(1)(A).
---------------------------------------------------------------------------

    In accordance with the expansive language that Congress used in 
section 1024(b)(7)(C), the Bureau finalizes its conclusion that section 
1024(b)(7)(C) provides authority for Sec.  1092.204.
Section 1092.204(a) Scope of Annual Reporting Requirements
Proposed Rule
    Proposed Sec.  1092.203(a) would have provided that the proposed 
section would apply only with respect to covered orders with an 
effective date (as that term was defined at proposed Sec.  1092.201(f)) 
on or after the nonbank registration system implementation date for 
proposed Sec.  1092.203.
    This section would have applied only to certain larger supervised 
entities.\386\ The Bureau preliminarily concluded that the reporting 
requirements set forth in the section--which focused specifically on 
larger supervised entities' compliance with the orders registered 
pursuant to Sec.  1092.202--should apply only prospectively to those 
covered orders with an effective date on or after the NBR 
implementation date for proposed Sec.  1092.203. The Bureau explained 
that the prospective application of Sec.  1092.203 would have ensured 
that entities faced with enforcement actions that might result in 
covered orders could take Sec.  1092.203's requirements into account in 
their decision-making. While the Bureau did not believe that compliance 
with proposed Sec.  1092.203's requirements would materially affect an 
entity's decision-making about how to respond to a prospective 
enforcement action--as discussed in further detail in section VII of 
the proposal, for the vast majority of entities, the Bureau generally 
did not anticipate any of the proposed rule's reporting and publication 
requirements imposing meaningful burden either operationally or on 
their bottom line--the Bureau proposed this provision out of an 
abundance of caution. In addition, the Bureau explained that this 
limitation would have helped ensure that supervised registered entities 
would be required to submit reports only after the nonbank registration 
system implementation date.
---------------------------------------------------------------------------

    \386\ The proposal would have excluded from the term 
``supervised registered entity'' persons with less than $1 million 
in annual receipts resulting from offering or providing all consumer 
financial products and services described in 12 U.S.C. 5514(a). As 
discussed in the section-by-section discussion of Sec.  1092.201(q) 
above, in a revision to the proposed rule, the Bureau is adopting an 
exclusion for persons with less than $5 million in annual receipts 
(as defined) resulting from offering or providing all consumer 
financial products and services described in 12 U.S.C. 5514(a), as 
well as a clarification to this provision.
---------------------------------------------------------------------------

Comments Received
    Commenters did not specifically address proposed Sec.  1092.203(a). 
For comments regarding the proposed written-statement requirements 
generally, including comments stating that the Bureau lacks authority 
to impose such requirements and otherwise commenting on the nature and 
scope of the requirements, see the discussion elsewhere in this 
section-by-section discussion of Sec.  1092.204.
Final Rule
    For the reasons discussed in the description of the proposal above, 
the Bureau adopts Sec.  1092.203(a) as proposed (renumbered as Sec.  
1092.204(a)), with certain changes for the reasons described 
below.\387\ See the section-by-section discussion of Sec.  1092.201(q) 
above for a discussion of revisions to the definition of ``supervised 
registered entity.''
---------------------------------------------------------------------------

    \387\ See also the section-by-section discussion of Sec.  
1092.101(e) above regarding the Bureau's adoption of the revised 
term ``nonbank registry implementation date.''
---------------------------------------------------------------------------

    Section 1092.204(a) describes the covered orders that are subject 
to Sec.  1092.204's written-statement requirements. The Bureau is 
finalizing three revisions to this paragraph (a). First, the Bureau is 
finalizing an amendment to the proposal at Sec.  1092.204(a)(1) that 
clarifies that Sec.  1092.204 applies only with respect to covered 
orders with an effective date on or after the ``applicable'' nonbank 
registry implementation date. This amendment reflects the addition of 
Sec.  1092.206 to the final rule, which establishes nonbank 
implementation dates for different categories of covered nonbanks 
subject to the final rule. As discussed in the section-by-section 
discussion of Sec.  1092.206 below, the Bureau is specifying the annual 
registration date in Sec.  1092.206 of the final rule for each category 
of covered nonbank in order to provide greater certainty and clarity to 
covered nonbanks as of the issuance of the final rule. Section 
1092.204's written-statement requirements apply only with respect to 
covered orders with an effective date on or after the nonbank registry 
implementation date that applies to the supervised registered nonbank 
subject to the covered order, as provided in Sec.  1092.206.
    Second, the Bureau is finalizing an amendment to the proposal at 
Sec.  1092.204(a)(1) that provides that final Sec.  1092.204 shall 
apply only with respect to covered orders ``as to which information is 
provided or required to be provided under Sec.  1092.202'' (and that 
also have an effective date on or after the applicable nonbank registry 
implementation date for Sec.  1092.204). This amendment clarifies that 
only covered orders that have been registered (or are required to be 
registered) under Sec.  1092.202 are subject to Sec.  1092.204's 
written-statement requirements. For example, a supervised registered 
nonbank would not be required to comply with Sec.  1092.204's written-
statement requirements in cases where the applicable covered order has 
not

[[Page 56108]]

been registered (and was not required to be registered) under Sec.  
1092.202: (1) due to a stay or other agency or court action; (2) 
because the later of the 90-day period following its applicable nonbank 
registry implementation date or the effective date of the covered order 
as provided under Sec.  1092.202 had not yet expired; or (3) where the 
supervised registered nonbank has exercised the option to register an 
NMLS-published covered order under Sec.  1092.203 instead of Sec.  
1092.202. However, once the covered order is registered (or required to 
be registered) under Sec.  1092.202, the supervised nonbank must comply 
with Sec.  1092.204 as applicable, subject to the other provisions of 
the rule, including Sec.  1092.202(f)'s provisions regarding submitting 
a final filing upon termination of the covered order. See the section-
by-section discussion of Sec.  1092.204(d) below regarding the scope of 
the written statements required by that section.
    Third, the Bureau is finalizing a new paragraph at Sec.  
1092.204(a)(2) that provides that a supervised registered entity is not 
required to comply with Sec.  1092.204's written-statement requirements 
with respect to any NMLS-published covered order for which it chooses 
to comply with the one-time registration option described in Sec.  
1092.203. This provision complements the related provisions at Sec.  
1092.203(a) and (c), which also provide that a covered nonbank that is 
identified by name as a party subject to a covered order may elect to 
comply with the one-time registration option described in that section 
in lieu of complying with the requirements of Sec.  1092.204.
Section 1092.204(b) Requirement To Designate Attesting Executive
Proposed Rule
    Proposed Sec.  1092.203(b) would have required a supervised 
registered entity subject to an applicable covered order to annually 
designate as its attesting executive for purposes of proposed subpart B 
its highest-ranking duly appointed senior executive officer (or, if the 
supervised registered entity does not have any duly appointed officers, 
the highest-ranking individual charged with managerial or oversight 
responsibility for the supervised registered entity) whose assigned 
duties include ensuring the supervised registered entity's compliance 
with Federal consumer financial law, who has knowledge of the entity's 
systems and procedures for achieving compliance with the covered order, 
and who has control over the entity's efforts to comply with the 
covered order. The supervised registered entity would have been 
required annually to designate one attesting executive for each covered 
order to which it is subject and for all submissions and other purposes 
related to that covered order under proposed subpart B. The supervised 
registered entity would have also been required to authorize the 
attesting executive to perform the duties of an attesting executive on 
behalf of the supervised registered entity with respect to the covered 
order as required in proposed Sec.  1092.203, including submitting the 
written statement described in proposed Sec.  1092.203(d).
Criteria That an Attesting Executive Must Satisfy
    For the reasons described in section IV(D) of the proposal, 
proposed Sec.  1092.203(b) would have provided that a supervised 
registered entity subject to a covered order described in proposed 
Sec.  1092.203(a) would generally be required to designate as its 
attesting executive for purposes of proposed subpart B its highest-
ranking duly appointed senior executive officer (i) whose assigned 
duties include ensuring the supervised registered entity's compliance 
with Federal consumer financial law, (ii) who has knowledge of the 
entity's systems and procedures for achieving compliance with the 
covered order, and (iii) who has control over the entity's efforts to 
comply with the covered order. If the supervised registered entity has 
no duly appointed officers, proposed Sec.  1092.203(b) would have 
required the entity to designate as its attesting executive the 
highest-ranking individual charged with managerial or oversight 
responsibility for the supervised registered entity who meets those 
three criteria.
    As explained below in the discussion of proposed Sec.  1092.203(d), 
the Bureau proposed that the attesting executive would sign a written 
statement submitted by the supervised registered entity regarding the 
entity's compliance with covered orders. The Bureau believed that 
proposal would have the benefit of ensuring that the supervised 
registered entity's reporting obligations under proposed Sec.  1092.203 
have received attention from the highest applicable level of a 
supervised registered entity's management. The Bureau proposed the 
criteria in proposed Sec.  1092.203(b) in order to ensure that the 
person who attests and signs the written statement has sufficient 
authority and access to all the relevant company stakeholders to ensure 
that the report is as complete and accurate as possible. The Bureau 
believed that the language of proposed Sec.  1092.203(b) would have 
ensured that the supervised registered entity designates an 
appropriately high-ranking employee as its attesting executive. The 
Bureau believed that such a person will be in the best position to know 
all relevant information with respect to the order, and to provide a 
reliable attestation in the written statement regarding the entity's 
compliance with the covered order.
    The Bureau anticipated that this individual will in most cases 
likely be a top senior executive of the entity. For entities that are 
not organized as corporations, and thus may not have duly appointed 
officers, proposed Sec.  1092.203(b) would have clarified that the 
attesting executive may be another individual who is charged with 
managerial or oversight responsibility for the supervised registered 
entity. The Bureau anticipated that this individual would in most cases 
serve in a capacity equivalent to a high-ranking senior executive at a 
corporation. For example, the Bureau noted, a supervised registered 
entity organized as a limited liability company that is run by an 
individual managing member and lacks executive officers may designate 
the managing member as its ``attesting executive,'' where the managing 
member's assigned duties include ensuring the supervised registered 
entity's compliance with Federal consumer financial law and the 
managing member has the requisite knowledge and control as described in 
proposed Sec.  1092.203(b). Likewise, the Bureau further noted, a 
supervised registered entity organized as a general or limited 
partnership may designate an individual partner who otherwise satisfies 
the requirements set forth in proposed Sec.  1092.203(b). The use of 
the term ``executive'' was not intended to preclude the designation of 
such persons as ``attesting executives'' where the supervised 
registered entity otherwise lacks a senior executive officer who 
satisfies proposed Sec.  1092.203(b)'s requirements.
    The Bureau anticipated that entities would take appropriate steps 
to ensure compliance with the proposed rule in the event that an 
executive leaves employment or changes duties, or a higher-ranking 
executive is put in place. For example, the Bureau explained, a 
supervised registered entity might consider designating an alternate 
attesting executive for each covered order to address such 
possibilities, including by ensuring that they have sufficient 
knowledge of the entity's systems and procedures for achieving 
compliance with the applicable covered

[[Page 56109]]

order(s) and control over the entity's efforts to comply with the 
covered order(s).
    The proposal would have also required that the supervised 
registered entity designate as its attesting executive for a covered 
order a person who has knowledge of the entity's systems and procedures 
for achieving compliance with the covered order. The Bureau anticipated 
that this requirement would help ensure that the annual written 
statement is completed by an individual with sufficient knowledge of 
the entity's systems and procedures for achieving compliance to make 
the written statement required by proposed Sec.  1092.203(d). The 
Bureau expected that an executive who lacked knowledge of those 
compliance systems and procedures would not be in the best position to 
identify violations of the order. Therefore, the Bureau believed that 
without the proposed knowledge requirement, the attestation proposed at 
Sec.  1092.203(d)(2) would lose much of its usefulness.
    Proposed Sec.  1092.203(b) would have also required that the 
attesting executive be required to have control over the entity's 
efforts to comply with the covered order. By this requirement, the 
Bureau meant to require that the executive have the ability, under the 
entity's existing compliance systems and procedures, to direct and 
supervise the entity's efforts to comply with the applicable covered 
order. The Bureau explained that this proposed requirement would 
complement the knowledge requirement discussed above, since the Bureau 
believed an executive with control over the entity's efforts to comply 
with the covered order would be more likely also to have (and to 
demand) the requisite knowledge regarding the entity's related 
compliance systems and procedures. The Bureau noted that it is possible 
that an executive with knowledge of an entity's related compliance 
systems and procedures, but who does not have control over the entity's 
efforts to comply with an applicable covered order, would not have been 
fully informed regarding violations of the order. The Bureau further 
explained that it would also be able to use information regarding which 
executives have control of the entity's efforts to comply with specific 
covered orders in connection with its supervisory reviews of the 
entity's compliance systems and procedures, compliance with Federal 
consumer financial law, and risks to consumers and markets.
    In addition, the Bureau expected that the proposal's requirements 
to designate an attesting executive who has knowledge of the entity's 
systems and procedures for achieving compliance with its covered 
orders, and who has control over the entity's efforts to comply with 
its covered orders, would create an additional incentive for certain 
entities to comply with their obligations to consumers. The Bureau 
believed that most supervised registered entities would comply with 
covered orders even without the proposal. However, the Bureau believed 
that these requirements would motivate additional compliance efforts at 
certain entities that have failed to take adequate steps to comply with 
the order. The Bureau also believed that if a particular executive is 
identified to the Bureau as the person ultimately accountable for 
ensuring compliance with a covered order, the clear delineation of that 
executive's responsibility would prompt the executive to focus greater 
attention on ensuring compliance, which in turn would increase the 
likelihood of compliance.
    In addition, the Bureau anticipated that obtaining information 
about which senior executive officer(s) at a supervised registered 
entity have knowledge of the entity's systems and procedures for 
achieving compliance with specific covered orders, and who have control 
over the entity's efforts to comply with those covered orders, would 
facilitate the Bureau's ability to identify situations in which 
individual executives have recklessly disregarded, or have actual 
knowledge of, the entity's violations of covered orders. The Bureau 
believed that this information would better enable the Bureau to 
identify risks to consumers related to such orders and the entity's 
compliance systems and procedures, and to take steps to address such 
risks through its supervisory or other authorities. Where the 
applicable covered order is a Bureau order, the Bureau believed such 
information will also facilitate the Bureau's efforts to assess 
compliance with the order and to make determinations regarding any 
potential related Bureau supervisory or enforcement actions. For 
example, the Bureau noted, where information obtained under proposed 
Sec.  1092.203 indicates that a high-ranking executive has knowledge of 
(or has recklessly disregarded) violations of legal obligations falling 
within the scope of the Bureau's jurisdiction, and has authority to 
control the violative conduct, the Bureau could use that information in 
assessing whether an enforcement action should be brought not only 
against the nonbank covered person, but also against the individual 
executive.
    The Bureau noted that in developing this proposal, it considered 
various options other than requiring entities to designate a senior 
executive officer as an attesting executive. The Bureau considered 
permitting entities to designate lower ranking individuals whose 
assigned duties include ensuring the supervised registered entity's 
compliance with Federal consumer financial law and who possessed 
sufficient knowledge and control to provide a written statement under 
proposed Sec.  1092.203. However, the Bureau believed that requiring 
entities to designate their highest-ranking executive officer would 
better help ensure that all relevant information was considered when 
submitting the written statement. In addition, because the attestation 
that would have been provided under proposed Sec.  1092.203(d)(2) would 
be subject to the knowledge of the attesting executive, the Bureau 
believed this requirement would help enhance the reliability of that 
attestation, and thus the accuracy of the written statement. The Bureau 
noted that lower-ranking managers at the entity might not be aware of 
all relevant facts. Also, the Bureau believed that the designation 
requirement would provide an important piece of information regarding 
the organizational structure of an entity's compliance management 
system--namely, the identity of the entity's highest-ranking executive 
whose assigned duties include ensuring the supervised registered 
entity's compliance with Federal consumer financial law, and who has 
the requisite level of knowledge and control. The Bureau believed that 
this information would be valuable to the Bureau's understanding of the 
supervised registered entity's compliance systems and procedures and 
its organization, business conduct, and activities subject to the 
covered order. The Bureau concluded that such information would have 
informed the Bureau's functions, including its use of its supervisory 
and enforcement authorities.
    As another alternative to imposing this requirement, the Bureau 
noted that it might instead require the entity to appoint an individual 
with a given title--for example, the entity's Chief Compliance Officer 
(CCO), or equivalent. However, the Bureau observed that it did not have 
comprehensive information regarding the organizational structures of 
the entities it supervises, and the Bureau expected that many 
supervised registered entities may have organizational structures that 
do not provide for a CCO or other officer title.

[[Page 56110]]

The Bureau believed that the proposed requirement to designate the 
entity's highest-ranking executive who satisfies the specified criteria 
would help ensure that an appropriately high-level individual was 
designated but would retain flexibility to accommodate a range of 
entity organizational structures. And as discussed above, the Bureau 
believed that requiring the entity to designate its attesting executive 
for each covered order would provide the Bureau with information 
regarding the entity, including its compliance systems and procedures 
and its organization, business conduct, and activities subject to the 
covered order.
    As another alternative to the approach proposed in Sec.  
1092.203(b), the Bureau explained that it might require supervised 
registered entities to obtain a review or audit by an independent 
third-party consultant of the entities' written statements and the 
facts underlying the written statements. However, the Bureau believed 
that this alternative would impose costs on the entity that would 
largely be avoided by the proposal's requirement to designate an 
attesting executive already providing services to the entity and would 
require the Bureau to impose controls on such reviews in order to 
ensure their usefulness. In addition, this alternative would not have 
provided the Bureau with the information regarding the entity described 
above.
Requirement To Designate an Attesting Executive for Each Covered Order 
on an Annual Basis
    Proposed Sec.  1092.203(b) would have required a supervised 
registered entity to annually designate one attesting executive for 
each applicable covered order to which it is subject and for all 
submissions and other purposes related to that covered order under 
proposed subpart B. The Bureau believed that requiring a supervised 
registered entity to designate an attesting executive for each covered 
order would facilitate the Bureau's supervision of the supervised 
registered entity by, among other things, facilitating the Bureau's 
supervisory communications with the supervised registered entity 
regarding the covered order, including any related supervisory 
concerns. The Bureau would have also been able to contact the attesting 
executive with questions and to understand how the executive's 
responsibilities relate to the entity's obligations under its covered 
orders. The Bureau also believed that by requiring the entity to 
designate its attesting executive(s) on an annual basis, the proposal 
would have better enabled the Bureau to understand the reporting 
relationships within the entity and the entity's compliance systems and 
procedures. The Bureau thus believed that this proposed designation 
requirement would help ensure compliance with the proposed rule, 
facilitate the Bureau's supervision of the supervised registered 
entity, help the Bureau assess and detect risks to consumers, and help 
ensure that the entity is legitimate and able to perform its 
obligations to consumers.
    The Bureau expected that under most circumstances, a supervised 
registered entity would designate one single individual as its 
attesting executive for all of the covered orders to which it is 
subject. However, the Bureau noted, there may be situations in which 
there is no one senior executive officer with the requisite knowledge 
of the entity's systems and procedures for achieving compliance with 
all of the covered orders to which the entity is subject, and who has 
control over the entity's efforts to comply with those orders. In such 
a case, the Bureau proposed that the entity could designate different 
attesting executives for the covered orders. By requiring a supervised 
registered entity to designate one attesting executive for each covered 
order described in proposed Sec.  1092.203(a) to which it is subject, 
proposed Sec.  1092.203(b) would have enabled the Bureau to better 
identify such situations.
Comments Received
    See the beginning of the section-by-section discussion of Sec.  
1092.204 for a discussion of certain comments received regarding the 
Bureau's legal authority to impose the final rule's written-statement 
requirements.
    Industry commenters and the joint comment from State regulators 
generally opposed the imposition of the rule's written-statement 
requirements. Commenters stated that the proposed requirements were 
unnecessary, onerous, and vague, would add little to no value to the 
Bureau fulfilling its objectives, and would be unlawful and drive up 
compliance costs. An industry commenter stated that the proposed 
requirements were extreme and an attempt to trap and embarrass 
companies and their executives. Industry commenters stated that the 
proposed written-statement requirements would not further the purpose 
of the proposal.
    Industry commenters stated that the proposed written statements 
were more burdensome than described, and that the proposal did not 
adequately explain the benefits of the written-statement requirements. 
Industry commenters expressed concern that the written-statement 
requirements would harm consumers by discouraging qualified individuals 
from seeking employment with nonbanks, and stated that the Bureau 
should reconsider the cost and impact that would be associated with the 
written-statement requirements in harming hiring by supervised 
registered entities and in discouraging applicants. The SBA Office of 
Advocacy stated that the Bureau had failed to support its claims that 
few entities would lack a qualified executive, and to provide 
information about the costs that would be incurred to obtain a 
qualified executive to perform the duties required.
    Industry commenters stated that proposed Sec.  1092.203(b)'s 
requirements to designate an attesting executive for each covered order 
were unfair, because the proposed designation requirement served only 
as a shaming tool and appeared to place sole responsibility for 
compliance on the attesting executive. However, a consumer advocate 
commenter stated that the Bureau would be able to make clear that the 
attesting executive is not necessarily an at-fault individual. An 
industry commenter stated that no other industry seeks to impose 
liability upon corporate executives acting in a corporate capacity, and 
that under the proposal such liability would be unlimited. Industry 
commenters stated that the proposed requirement to designate an 
attesting executive for each covered order did not reflect real-world 
situations and how companies actually manage risk, and would 
inappropriately signal that other persons are less responsible for the 
supervised registered entity's compliance with the covered order. 
Industry commenters also stated that proposed Sec.  1092.203(b)'s 
requirements to designate an attesting executive for each covered order 
were in conflict with the Bureau's existing guidance stating that an 
institution's board of directors or other principals are ultimately 
responsible for the institution's compliance management, and that 
designation of an attesting executive would encourage the mistaken 
notion that compliance is the sole responsibility of that individual.
    The proposal indicated that the Bureau was considering adopting a 
requirement that the attesting executive attest that, in the 
executive's professional judgment, the entity's compliance systems and 
procedures are reasonably designed to detect violations of the 
applicable covered order and ensure that such violations are reported

[[Page 56111]]

to the attesting executive.\388\ An industry commenter stated that this 
alternative requirement would contribute to the impression that the 
compliance burden rests solely with the attesting executive.
---------------------------------------------------------------------------

    \388\ 88 FR 6088 at 6126.
---------------------------------------------------------------------------

    An industry commenter stated that designation of an attesting 
executive would serve no purpose for closely held entities.
    Industry commenters stated that the rule, including the proposed 
written-statement requirements, should apply prospectively only.
Response to Comments Received
    See the beginning of the section-by-section discussion of Sec.  
1092.204 for a discussion of the Bureau's response to certain comments 
received regarding the Bureau's legal authority to impose the final 
rule's written-statement requirements. As explained in that discussion, 
Sec.  1092.204's written-statement requirements are appropriate and 
lawful and will serve the purposes identified in CFPA section 
1024(b)(7)(A)-(C) and the goals of the final rule.
    See part VIII for discussion of comments related to the economic 
costs and benefits associated with Sec.  1092.204's written-statement 
requirements, including costs related to hiring and discouraging 
qualified applicants from seeking employment with supervised registered 
entities. As described in that analysis, the Bureau concludes that the 
requirements imposed by the final rule's written-statement requirements 
will impose only modest costs on entities beyond the costs entities are 
already incurring to ensure compliance with covered orders. The Bureau 
is finalizing an exception to the written-statement requirements for 
NMLS-published covered orders, as discussed in part IV(E) and the 
section-by-section discussion of Sec.  1092.203, which will reduce 
overall costs to industry as discussed in part VIII.
    As part of its mandate to ensure that markets for consumer 
financial products are fair, transparent, and competitive,\389\ the 
Bureau is committed to applying the law and regulations fairly and 
equitably across all persons subject to its authority. The Bureau 
believes the written statement is a fair approach to obtaining 
important information about covered orders from supervised registered 
entities. The Bureau disagrees with the industry commenters that Sec.  
1092.204(a)'s requirement to designate an attesting executive for each 
covered order represents an unfair attempt to place responsibility on 
individual attesting executives for violations of covered orders, or to 
impose unlimited accountability on individual executives in an 
unprecedented manner. The final rule does not establish any new 
standards, or alter any existing standards, regarding individuals' 
liability for supervised registered entities' violations of covered 
orders or other legal obligations. Nor does the final rule alter which 
agencies have jurisdiction to enforce the obligations imposed in 
covered orders or the scope of agencies' discretion to determine 
whether to bring such enforcement actions. Any individual 
accountability in connection with violations of covered orders shall 
continue to be determined in accordance with existing law. The final 
rule also does not affect the Bureau's existing approach to its 
supervisory responsibilities, including the manner in which the Bureau 
assesses board and management oversight at supervised registered 
entities.\390\
---------------------------------------------------------------------------

    \389\ See 12 U.S.C. 5511(a).
    \390\ See, e.g., Federal Financial Institutions Examination 
Council, Uniform Interagency Consumer Compliance Rating System, 81 
FR 79473, 79478 (Nov. 14, 2016) (discussing assessment by agency 
examiners of Board and management oversight).
---------------------------------------------------------------------------

    As described in the proposal, Sec.  1092.204(b) establishes 
requirements for the supervised registered entity's designation of its 
attesting executive(s) to ensure that the person who signs the written 
statement has sufficient authority and access to all the relevant 
company stakeholders to ensure that the report is as complete and 
accurate as possible.\391\ Those requirements are intended to serve the 
information-collection purposes of the rule by helping to ensure the 
accuracy and usefulness of the written statement. As stated in the 
proposal,\392\ the Bureau also believes these requirements will create 
an additional incentive for certain entities to comply with their 
obligations to consumers. These requirements are specific to the rule. 
As the Bureau explained in the proposal,\393\ the final rule does not 
establish any minimum level of compliance management or expectation for 
compliance systems and procedures. Further, aside from the targeted 
designation, written-statement, and recordkeeping requirements in Sec.  
1092.204(b) through (e), the final rule does not impose any 
requirements on any of the entity's internal affairs, or require any 
particular approach of allocating responsibility for complying with 
covered orders or with the law generally. The Bureau understands that 
compliance management at supervised registered entities will likely be 
managed differently from entity to entity and that compliance 
management systems will and should be adapted to a supervised 
registered entity's business strategy and operations. The final rule 
does not purport to impose any restrictions on the manner in which 
supervised registered entities address such matters.
---------------------------------------------------------------------------

    \391\ 88 FR 6088 at 6121-22.
    \392\ Id. at 6122.
    \393\ Id. at 6100.
---------------------------------------------------------------------------

    In the proposal, the Bureau explained that, because--in the 
Bureau's experience--most supervised entities take active steps to 
comply with covered orders, they would likely already have in place an 
officer or employee who could satisfy the Sec.  1092.204(b) 
criteria.\394\ For similar reasons, the Bureau believed that most 
supervised entities would have in place systems and procedures to help 
them achieve compliance with covered orders to which they are 
subject.\395\ Therefore, the Bureau believed that few supervised 
entities would need to make significant changes to their compliance 
systems to comply with Sec.  1092.204.\396\ Despite the Bureau's 
request for comment on the issue, no commenter provided persuasive 
evidence that Sec.  1092.204(b)'s designation requirement likely would 
impose material additional costs on a substantial number of supervised 
registered entities, beyond the costs those entities are already likely 
to incur as part of fulfilling their obligations under the covered 
orders to which they are subject. For additional discussion about these 
and other potential costs associated with this provision, see parts 
VIII and IX.
---------------------------------------------------------------------------

    \394\ See 88 FR 6088 at 6132.
    \395\ See id. at 6133.
    \396\ See id. at 6132-33.
---------------------------------------------------------------------------

    In the proposal,\397\ the Bureau described the attesting executive 
as ``identified to the Bureau as the person ultimately accountable for 
ensuring compliance with a covered order.'' This description was merely 
intended to reflect Sec.  1092.203(b)'s requirements regarding the 
designation of the highest-ranking individual charged with managerial 
or oversight responsibility for the supervised registered entity who 
meets the three criteria established in that section. To be clear, the 
final rule does not affect the Bureau's long-standing guidance for 
supervised registered entities organized as corporations that the board 
of directors is ultimately responsible for developing and administering 
a compliance management system that ensures

[[Page 56112]]

compliance with Federal consumer financial laws and addresses and 
minimizes associated risks of harm to consumers.\398\ In a supervised 
registered entity organized under a non-corporate form, that ultimate 
responsibility may rest with a controlling person or some other 
arrangement. The Bureau understands that compliance management at 
supervised registered entities will likely be managed differently from 
entity to entity and that compliance management systems will and should 
be adapted to a supervised registered entity's business strategy and 
operations. Consistent with FFIEC guidance, Bureau examiners evaluate 
Board and management oversight factors commensurate with the 
institution's size, complexity, and risk profile.\399\ The Bureau 
agrees that compliance is often the responsibility of many, and not 
just a single executive. The final rule does not attempt to place such 
responsibility entirely on the shoulders of the entity's attesting 
executive.
---------------------------------------------------------------------------

    \397\ Id. at 6122.
    \398\ See CFPB Supervision and Examination Manual at CMR 3.
    \399\ See, e.g., Uniform Interagency Consumer Compliance Rating 
System, 81 FR 79473 at 79480.
---------------------------------------------------------------------------

    Nevertheless, as stated in the proposal,\400\ the Bureau does 
believe that Sec.  1092.204(b)'s designation requirement will create an 
additional incentive for certain entities to comply with their 
obligations to consumers. The Bureau expects the requirement to 
designate a single attesting executive for the covered order will 
prompt the executive to focus greater attention on ensuring compliance, 
which in turn will increase the likelihood of compliance. Also, as 
stated in the proposal,\401\ the Bureau intends to use the information 
submitted under Sec.  1092.204 to facilitate its efforts to assess 
compliance with any covered orders that may be enforced by the Bureau, 
and to make determinations regarding any potential Bureau supervisory 
or enforcement actions related to the covered order or any other 
identified risks to consumers. For example, where information obtained 
under proposed Sec.  1092.204 indicates that a high-ranking executive 
has knowledge of (or has recklessly disregarded) violations of legal 
obligations falling within the scope of the Bureau's jurisdiction, and 
has authority to control the violative conduct, the Bureau may use that 
information in assessing whether an enforcement action should be 
brought not only against the nonbank covered person, but also against 
the individual executive. However, the final rule itself does not 
impose any legal obligation on the attesting executive to ensure 
compliance with any covered order.
---------------------------------------------------------------------------

    \400\ 88 FR 6088 at 6122.
    \401\ Id.
---------------------------------------------------------------------------

    The Bureau declines to finalize the proposed additional requirement 
described in the proposal \402\ that would have required the attesting 
executive to attest that the entity's compliance systems and procedures 
are reasonably designed to detect violations of the applicable covered 
order and ensure that such violations are reported to the attesting 
executive. The Bureau disagrees with the industry commenter that a 
requirement that the executive attest to such matters would contribute 
to the impression that the compliance burden rests solely with the 
attesting executive. But the Bureau does not believe it is necessary at 
this time to require supervised registered entities to submit such 
information on an annual basis, or to dedicate staff and other Bureau 
resources to reviewing such submissions.
---------------------------------------------------------------------------

    \402\ 88 FR 6088 at 6126.
---------------------------------------------------------------------------

    The Bureau believes it is appropriate even for closely held 
entities annually to designate an attesting executive for each covered 
order. The designation requirement will serve the information-
collection purposes of the rule by ensuring that the person who signs 
the written statement has sufficient authority and access to all the 
relevant company stakeholders to ensure that the report is as complete 
and accurate as possible.\403\ These requirements are necessary even 
for closely held entities. The Bureau may not regularly examine such 
entities, may not be aware of the entity's existence, and may not have 
adequate information about the entity's structure or operations; the 
designation requirement will help inform the Bureau regarding such 
matters. In addition, the designation requirement will facilitate the 
Bureau's efforts to assess compliance with any covered orders that may 
be enforced by the Bureau, and to make determinations regarding any 
potential Bureau supervisory or enforcement actions related to the 
covered order or any other identified risks to consumers.
---------------------------------------------------------------------------

    \403\ See 88 FR 6088 at 6121-22.
---------------------------------------------------------------------------

    As for commenters' requests that the rule's written-statement 
requirements apply only prospectively, they are in fact so limited. 
Section 1092.204's written statement requirements apply only 
prospectively to covered orders with an effective date after the 
nonbank registry implementation date that is applicable to the 
supervised registered entity under Sec.  1092.206. Thus, a supervised 
registered entity will not be required to file written statements for 
any covered order issued before late 2024, at the earliest. Moreover, 
as explained above, while some covered orders with an effective date 
after the applicable nonbank registry implementation date might relate 
to violations of covered laws committed before the final rule's 
effective date, the Bureau does not believe that the prospect of 
becoming subject to the written-statement requirements would have had a 
significant marginal impact on a supervised registered entity's 
decision whether to engage in conduct that risked violating covered 
laws, given the negative consequences already associated with 
committing such legal violations.\404\
---------------------------------------------------------------------------

    \404\ See additional discussion of retroactivity concerns in the 
section-by-section discussion of Sec.  1092.202(d) above.
---------------------------------------------------------------------------

Final Rule
    The Bureau adopts Sec.  1092.203(b) as proposed (renumbered as 
Sec.  1092.204(b)) for the reasons described above, with minor 
technical edits and certain changes and clarifications for the reasons 
discussed below.
    The first sentence of Sec.  1092.204(b) in the final rule has been 
revised from the proposed version to provide that the requirement to 
designate an attesting executive applies only as to covered orders that 
are described in Sec.  1092.204(a). The first sentence of Sec.  
1092.204(b) in the final rule has also been revised from the proposed 
version to clarify, consistent with the approach described in the 
proposal and the final rule, that under Sec.  1092.204(b) a supervised 
registered entity subject to a covered order described in Sec.  
1092.204(a) is required to designate an attesting executive for each 
covered order to which it is subject.
Section 1092.204(c) Requirement To Provide Attesting Executive(s) With 
Access to Documents and Information
Proposed Rule
    Proposed Sec.  1092.203(c) would have required a supervised 
registered entity subject to proposed Sec.  1092.203 to provide its 
attesting executive(s) with prompt access to all documents and 
information related to the supervised registered entity's compliance 
with all applicable covered order(s) as necessary to make the written 
statement(s) required in proposed Sec.  1092.203(d).
    The Bureau believed that this proposed requirement would help 
ensure that the attesting executive for an applicable covered order has 
timely access to the documents and information needed to submit an 
informed and accurate written statement

[[Page 56113]]

under proposed Sec.  1092.203(d). A supervised registered entity would 
not have been permitted to refuse or deny to its attesting executive 
access to documents or information related to the supervised registered 
entity's compliance with the covered order. Under the proposed 
requirement, the Bureau would have expected the attesting executive to 
have prompt access to all such documents and information, 
notwithstanding, for example, any privileges that may apply to the 
documents and information, or where or how the documents and 
information are stored.
    The Bureau believed that this requirement would enhance the 
accuracy and usefulness of the written statement, which in turn would 
enhance the Bureau's ability to supervise the entity effectively, 
assess and detect risks to consumers, and ensure the entity is 
legitimate and able to perform its obligations to consumers. The Bureau 
requested comment on the need for this requirement and whether other 
requirements, modifications, or amendments to proposed Sec.  
1092.203(c) should be considered in order to ensure the accuracy and 
usefulness of the written statement.
Comments Received
    Commenters did not specifically address proposed Sec.  1092.204(c).
Final Rule
    For the reasons set forth in the description of the proposal above, 
the Bureau adopts Sec.  1092.203(c) as proposed (renumbered as Sec.  
1092.204(c)).
Section 1092.204(d) Annual Requirement To Submit Written Statement to 
the Bureau for Each Covered Order
Proposed Rule
    Proposed Sec.  1092.203(d) would have required, on or before March 
31 of each calendar year, that the supervised registered entity submit 
to the NBR system, in the form and manner specified by the Bureau, a 
written statement with respect to each covered order described in 
proposed Sec.  1092.203(a). In the written statement, the attesting 
executive would have been required to provide a summary description of 
the executive's efforts to review and oversee compliance with the 
applicable order, and to attest regarding the entity's compliance with 
the order. Proposed Sec.  1092.203(d) would have required the written 
statement to be signed by the supervised registered entity's attesting 
executive.
    Proposed Sec.  1092.203(d)(1) would have required the written 
statement to contain a general summary description of the steps, if 
any, the attesting executive has undertaken to review and oversee the 
supervised registered entity's activities subject to the applicable 
covered order for the preceding calendar year. This proposal was 
intended to provide information to the Bureau regarding the compliance 
monitoring efforts that have been undertaken by the executive during 
the applicable time period in connection with the order. The proposed 
rule would not have established any minimum procedures or otherwise 
specified the steps the executive must take to review and oversee the 
entity's activities. Instead, the proposed rule would have required 
only that the executive provide the Bureau with a general description 
of the steps the executive has already taken in this regard. The Bureau 
believed that this information would enhance the usefulness of the 
written statement by providing valuable context regarding the basis of 
the attesting executive's knowledge and by assisting the Bureau with 
determining the degree to which the Bureau may rely on the written 
statement. The Bureau believed that this information would be useful 
because the proposal would not by itself establish minimum requirements 
regarding the attesting executive's review and oversight of the 
entity's activities.
    Proposed Sec.  1092.203(d)(2) would have required the attesting 
executive to attest whether, to the attesting executive's knowledge, 
the supervised registered entity during the preceding calendar year 
identified any violations or other instances of noncompliance with any 
obligations that were imposed in a public provision of the covered 
order by the applicable agency or court based on a violation of a 
covered law. The attestation would have been provided subject to the 
attesting executive's knowledge. As discussed above with respect to 
proposed Sec.  1092.203(b) and proposed Sec.  1092.203(c), the Bureau 
anticipated that the attesting executive would have adequate knowledge 
of the entity's systems and procedures for achieving compliance with 
the covered order to provide a useful attestation.
    The written statement described in the proposal would have 
addressed violations and other instances of noncompliance with 
obligations that are ``based on'' a violation of a covered law. For 
purposes of this proposed requirement, the Bureau explained that an 
obligation would have been ``based on'' an alleged violation where the 
order identifies the covered law in question, asserts or otherwise 
indicates that the covered nonbank has violated it, and imposes the 
obligation on the covered nonbank as a result of the alleged 
violation.\405\ This would have included, for example, obligations 
imposed as ``fencing-in'' or injunctive relief, so long as those 
obligations were imposed at least in part as a result of the entity's 
violation of a covered law. The proposed written statement would have 
also needed to address, for example, any obligation imposed as part of 
other legal or equitable relief granted with respect to the violation 
of a covered law, as well as any obligation imposed in order to 
prevent, remedy, or otherwise address a violation of a covered law, or 
the conditions resulting from such violation. The Bureau explained 
that, as discussed elsewhere in the proposal, an order may identify a 
covered law as the legal basis for the obligations imposed by 
referencing another document, such as a written opinion, stipulation, 
or complaint, that shows that a covered law served as the legal basis 
for the obligations imposed in the order. The Bureau proposed this 
approach because an order may satisfy the proposed definition of 
``covered order'' but nonetheless contain provisions that are entirely 
unrelated to covered laws. This element of the requirement in proposed 
Sec.  1092.203(d)(2) was intended to exclude such provisions that are 
entirely unrelated to violations of covered laws.
---------------------------------------------------------------------------

    \405\ As in the context of proposed Sec.  1092.201(e)(4), the 
Bureau explained that an obligation imposed based on multiple 
violations, some of covered laws and some of other laws, would 
qualify as an ``obligation[ ] . . . based on an alleged violation of 
a covered law'' within the meaning of proposed Sec.  1092.203(d)(1), 
even if the violations of the non-covered laws would themselves have 
sufficed to warrant the imposition of the obligation.
---------------------------------------------------------------------------

    The supervised registered entity would have been required to state 
whether it has or has not identified instances of noncompliance with 
respect to each covered order. If no such instances of noncompliance 
have been identified, the supervised registered entity would have been 
required to so state. The proposed rule would not have established any 
minimum procedures or otherwise imposed or specified steps a supervised 
registered entity must take in order to review or monitor compliance 
with each covered order.\406\ Instead, the proposed rule would merely 
have required supervised registered entities to report violations and 
noncompliance that they had already identified in the course of their 
own compliance reviews and assessments. The Bureau believed

[[Page 56114]]

that supervised registered entities likely already conduct reviews to 
determine their compliance with covered orders, and those reviews would 
assist in completing the required written statements. The Bureau did 
not expect the proposal to amend or affect any review, reporting, or 
recordkeeping requirement contained in any covered order or other 
provision of law.
---------------------------------------------------------------------------

    \406\ As discussed elsewhere in the proposal, the Bureau 
expected that some supervised registered entities might bolster 
their compliance efforts in response to the proposal.
---------------------------------------------------------------------------

    While proposed Sec.  1092.203(d) would have required the written 
statement to be signed by the supervised registered entity's attesting 
executive, it would not have required the attesting executive to submit 
a statement subject to the penalty of perjury. Nevertheless, the Bureau 
noted that knowingly and willfully filing a false attestation or report 
with the Bureau may be subject to criminal penalties.\407\ The Bureau 
believed that the signature requirement, and the consequent potential 
for criminal liability where a knowingly false attestation is made, 
would be likely to deter attesting executives from submitting written 
statements that are incorrect or based on incomplete or otherwise 
inadequate information. The Bureau explained that this requirement 
should significantly enhance the accuracy and usefulness of the written 
statement.
---------------------------------------------------------------------------

    \407\ See 18 U.S.C. 1001.
---------------------------------------------------------------------------

Comments Received
    Commenters objected to the proposed annual requirement to submit a 
written statement to the Bureau for each covered order, and to the type 
of information that the proposal would require a supervised registered 
entity to submit. Industry commenters stated that the written statement 
to be submitted under proposed Sec.  1092.204(d) would require proving 
to the Bureau that the entity had complied with applicable law. 
Industry commenters expressed concern with the Bureau's statement in 
the notice of proposed rulemaking \408\ that the proposed requirement 
for the attesting executive to sign the written statement, and the 
consequent potential for criminal liability where a knowingly false 
attestation is made, would be likely to deter attesting executives from 
submitting written statements that are incorrect or based on incomplete 
or otherwise inadequate information. Commenters referred or alluded to 
this statement in the proposal in expressing concern that an incorrect 
or false written statement would be punishable, and stated that a 
single individual could not hold first-hand knowledge sufficient to 
ensure compliance with a covered order. An industry commenter stated 
that the proposal seemed to conflate ``knowingly and willfully'' with 
the making of an incorrect statement or a statement based on incomplete 
or otherwise inadequate information, and stated that the Bureau's 
discussion of 18 U.S.C. 1001 was misleading and caused confusion as to 
what standard would apply to the attestation.
---------------------------------------------------------------------------

    \408\ See 88 FR 6088 at 6125.
---------------------------------------------------------------------------

    Commenters stated that the proposed written-statement requirements 
were vague and unclear, so executives and supervised registered 
entities would be required to guess what the Bureau expects in terms of 
compliance. Commenters stated that the Bureau must unambiguously 
articulate the obligations of supervised registered entities and 
attesting executives under the rule, including the potential liability 
and intent standards. Industry commenters further suggested that such 
assertedly vague requirements represented an attempt at ``regulation by 
enforcement'' by the Bureau.
    An industry commenter stated that the proposed requirement to 
attest regarding past violations was incompatible with constitutional 
due process, since a court might subsequently determine, after the 
executive had submitted a written statement, that an applicable 
violation had in fact occurred. The commenter expressed concern that 
such a development would lead to retroactive liability for the 
attesting executive.
    An industry commenter stated that the proposal would have required 
the submission of an absolute statement, which in the commenter's view 
would be unreasonable, and stated that the required written statement 
should include materiality and reasonableness standards--for example, 
to provide that the entity had not identified any material violations, 
and that the statement was based on a reasonable and good-faith review 
of the material information.
    Industry commenters and a joint comment by State regulators stated 
that the proposed written statement requirement was jurisdictional 
overreach by the Bureau and an unauthorized attempt to enforce laws 
that the Bureau does not enforce. Commenters also stated that the 
issuing agency (or court), and not the Bureau, should monitor and 
establish compliance guidelines related to the covered order.
    A joint comment by State regulators asserted that the proposed 
written-statement requirements would complicate and frustrate attempts 
by the States to enforce Federal consumer financial law, and stated 
that such requirements would be onerous, duplicative, and unnecessary, 
and may ultimately weaken the original regulatory action and order. 
This comment and industry commenters also stated that the proposed 
written-statement requirements would create contradictory reporting 
obligations, since covered orders themselves contain reporting 
provisions and the agencies that issue or obtain such orders will also 
be monitoring compliance.
    Commenters stated that in lieu of the proposed written-statement 
requirements, the Bureau should rely on similar attestations submitted 
to the NMLS, including the NMLS Form MU1, where applicable. The joint 
comment letter from State regulators stated that established 
information-sharing memorandums of understanding and supervisory 
coordination protocols provide the most effective and straightforward 
means for the Bureau and State regulators to raise concerns and 
identify potential instances of recidivism at supervised registered 
nonbanks.
    An industry commenter stated that the registry should provide 
supervised registered entities with an opportunity to supplement their 
written statements with relevant ameliorating information, such as 
remediation paid or steps taken.
    A joint comment by industry commenters stated that the proposal 
failed to consider downsides to the written-statement requirements, and 
that the Bureau had failed to provide an adequate explanation of the 
basis of its belief that those requirements would achieve their claimed 
benefits or the scale of any benefit to consumers.
    An industry commenter stated that the requirement that would have 
been imposed under proposed Sec.  1092.203(d)(1) to ``[g]enerally 
describe the steps that the attesting executive has undertaken to 
review and oversee the supervised registered entity's activities 
subject to the applicable covered order for the preceding calendar 
year'' may exceed the reporting requirements of the underlying covered 
order, multiplying the burden imposed by that order. Another industry 
commenter stated that this requirement would not provide an adequate, 
accurate description of the compliance framework and that the Bureau 
could instead simply obtain this information through its normal 
supervisory process. This commenter also stated that obtaining this 
information via the proposed registry would put confidential 
supervisory information at risk. Other industry commenters stated the 
Bureau should detail how it will safeguard written statement 
information against data breach.

[[Page 56115]]

    An industry commenter stated that the proposed registry should not 
require disclosure of information protected by the attorney-client 
privilege.
    Commenters stated that the proposed written-statement requirements 
would have a significant chilling effect on the hiring and retention of 
senior executives and could discourage competent individuals from 
serving in such roles, raising costs and potentially harming consumers.
    An industry commenter suggested that the proposed written-statement 
requirements would raise First Amendment concerns related to compelled 
speech, and an individual commenter expressed concerns regarding the 
proposal's implications for free speech.
    An industry commenter stated that the proposed written statements 
would be redundant because the applicable covered order, if issued 
under consent, would already have been signed by a company officer.
    An industry commenter stated that the attestation described at 
proposed Sec.  1092.203(d)(2) should not be made by an executive but by 
the supervised registered entity itself. An industry commenter stated 
that the proposed written statement would inappropriately substitute 
individual liability for the company's liability, contrary to 
longstanding corporate legal tenets regarding piercing the corporate 
veil.
    Industry commenters stated that the proposed written statements 
would cause supervised registered entities to place undue emphasis on 
compliance with covered orders to the detriment of their other 
compliance responsibilities, distorting compliance programs at such 
entities, imposing unwarranted burden, and harming consumers.
    Industry commenters stated that the proposed written-statement 
requirements should not include any representations about compliance 
with covered orders issued under State laws. In particular, these 
commenters suggested that because many covered orders require ongoing 
compliance with State UDAP laws, and because those laws are very broad 
and cover a wide range of activities, it would be impossible for 
attesting executives to be certain that the supervised registered 
entity had not violated such a covered order. Commenters stated that 
the Bureau has no legitimate interest in requiring written statements 
regarding compliance with such laws.
    More generally, commenters stated that the proposed written-
statement requirements were unfair because it would be impossible for 
an executive to attest that the supervised registered entity had not 
committed any violations of the applicable covered order, especially 
since such orders often cover a wide range of broad laws, including 
UDAAP laws.
    In the proposal, the Bureau stated that it was ``also considering 
adopting a requirement that the written statement contain a short 
description of the entity's compliance systems and procedures relating 
to the covered order, including a description of the processes for 
notifying the attesting executive regarding violations or other 
instances of noncompliance with the order.'' \409\ The Bureau stated 
that it ``expects that many executives may choose to provide such 
information in the summary narrative portion of the written statement 
required in proposed Sec.  1092.203(d)(1), as part of describing the 
steps that the attesting executive has undertaken to review and oversee 
the supervised registered entity's activities subject to the applicable 
covered order,'' but it sought ``comment on whether to expressly 
require submission of such information in the final rule.'' \410\ One 
industry commenter, while stating that the Bureau should remove the 
written-statement requirements altogether, argued in the alternative 
that if the Bureau did choose to require a written statement it should 
take an approach similar to this proposed alternative. Under the 
approach suggested by the industry commenter, the entity would be 
required to submit a written statement to the effect that the entity's 
overall compliance program is reasonably designed to detect and prevent 
violations of all orders, and not just a particular covered order. 
Another industry commenter stated that this proposed alternative would 
not alleviate the industry commenter's concerns about the proposal, 
would not provide an adequate, accurate description of the compliance 
framework, and could risk revealing confidential information about the 
entity or its compliance system or procedures.
---------------------------------------------------------------------------

    \409\ 88 FR 6088 at 6126.
    \410\ Id.
---------------------------------------------------------------------------

    Industry commenters stated that the proposal failed to identify 
benefits of the proposed written-statement requirements that could not 
readily be achieved through the Bureau's exercise of its existing 
supervisory authorities with fewer negative consequences. These 
commenters stated that the Bureau could gather sufficient information 
through its normal supervisory process. A commenter stated that the 
Bureau could obtain more detailed and comprehensive information about 
the entity's compliance systems and procedures for complying with the 
order through the supervisory process.
    Tribe and industry commenters stated that for purposes of the 
written statement, orders should not be considered ``final'' as 
provided under proposed Sec.  1092.201(e) until all avenues of appeal 
have been exhausted.
Response to Comments Received
    Section 1092.204(d) does not require that the supervised registered 
entity demonstrate its compliance with the covered order to the Bureau. 
The provision requires only that the supervised registered entity 
indicate whether or not, to the knowledge of the attesting executive, 
the supervised registered entity has identified any violations of 
applicable provisions of the covered order. As stated in the proposal, 
knowingly and willfully filing a false attestation or report with the 
Bureau may be subject to criminal penalties under other provisions of 
law outside the final rule.\411\ But neither the final rule nor the 
existing legal obligations of individuals and entities to be truthful 
in their attestations to the Bureau require attesting executives to 
demonstrate compliance with covered orders. Section 1092.204(d)(2) 
requires only that the executive attest (truthfully), to the 
executive's knowledge, regarding whether the entity has identified any 
applicable violations (or other instances of noncompliance). For 
example, an attesting executive might attest truthfully that the entity 
has not identified a violation even if the entity has in fact violated 
the order, so long as the entity has not identified that violation.
---------------------------------------------------------------------------

    \411\ See, e.g., 18 U.S.C. 1001. One industry commenter 
asserted, incorrectly, that the proposal would have required the 
attesting executive to submit the annual written statement subject 
to the penalty of perjury. As stated in the proposal, and as 
acknowledged by other commenters, proposed Sec.  1092.203(d) would 
not have required the attesting executive to submit a statement 
subject to the penalty of perjury. See 88 FR 6088 at 6125. The 
Bureau sought comment on its proposal to require the attesting 
executive's signature on the statement but not to require a 
statement subject to the penalty of perjury. Commenters did not 
provide arguments in support of changing this approach, and the 
Bureau finalizes Sec.  1092.204(d) without requiring the attesting 
executive to submit a statement subject to the penalty of perjury.
---------------------------------------------------------------------------

    The proposal's statement regarding the possibility of criminal 
penalties did not purport to expand or otherwise affect the scope of an 
executive's potential liability under existing criminal law for 
submitting false statements to the Bureau. Nor does the final rule 
impose any requirements regarding steps that an executive must

[[Page 56116]]

take to review and oversee the supervised registered entity's 
activities subject to the applicable covered order. While the Bureau 
expects attesting executives to submit truthful statements under the 
final rule and believes that the existence of other laws like 18 U.S.C. 
1001 provides incentives in that regard, the final rule does not 
purport to interpret provisions of criminal law (which are administered 
by agencies other than the Bureau) or to identify particular 
circumstances under which an attesting executive would become 
criminally liable for false statements.\412\
---------------------------------------------------------------------------

    \412\ Note, however, that a supervised registered entity's 
failure or refusal to make reports or provide information as 
required under the final rule may violate civil laws administered by 
the Bureau, including not just the rule itself but also 12 U.S.C. 
5536(a)(2).
---------------------------------------------------------------------------

    Nor, as discussed in the description of the proposal above, does 
the final rule itself establish any minimum procedures or otherwise 
specify the steps the executive must take in order to review and 
oversee the entity's activities. Instead, Sec.  1092.204(d)(1) requires 
only that the executive provide the Bureau with a general description 
of the steps the executive has already taken in this regard; this 
information will provide valuable context regarding the basis of the 
attesting executive's knowledge and will assist the Bureau with 
determining the degree to which the Bureau may rely on the written 
statement. The attestation submitted under Sec.  1092.204(d)(2) is made 
subject to the attesting executive's knowledge, as that knowledge 
exists. As discussed above, based in part on the other written-
statement requirements contained in Sec.  1092.204, the Bureau 
anticipates that the attesting executive will have adequate knowledge 
of the entity's systems and procedures for achieving compliance with 
the covered order to provide a useful attestation.
    The Bureau declines to modify the required contents of the written 
statement as provided at Sec.  1092.204(d)(1) and (2). The Bureau 
believes these provisions are sufficiently clear to inform registered 
supervised entities and their attesting executives regarding their 
responsibilities under the final rule. Section 1092.204(d)(1) requires 
that the attesting executive generally describe the steps that the 
attesting executive has undertaken to review and oversee the supervised 
registered entity's activities subject to the applicable covered order 
for the preceding calendar year. Section 1092.204(d)(2) requires that 
the attesting executive attest whether, to the attesting executive's 
knowledge, the supervised registered entity during the preceding 
calendar year identified any violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order by the applicable agency or court based 
on a violation of a covered law. If the executive knows of such 
identified violations, the executive should so state; conversely, if 
the executive does not know of such identified violations, the 
executive should so state. That is all these provisions of the final 
rule require.
    The final rule does not require that the supervised registered 
entity prove its compliance with the applicable covered order to the 
Bureau. Instead, the rule requires the attesting executive to state 
whether the entity has identified applicable violations of the covered 
order. If an agency or court were to subsequently determine that, 
contrary to the entity's determination at the time of the written 
statement, the supervised registered entity had in fact violated the 
covered order during the relevant year, that determination would not 
establish that the entity's attestation was false. Thus, the rule does 
not impose a retroactive liability on supervised registered entities or 
their attesting executives.
    The Bureau believes that the written statement requirement is 
reasonable and declines to impose materiality requirements as to the 
type of violations that must be declared. There is value to the Bureau 
in knowing about any violation of existing orders, even violations that 
might be characterized as ``minor.'' The covered order is in place 
because an agency or court has already determined that issuing the 
order, and each of the provisions thereof, was appropriate to address a 
violation by the supervised registered entity of a covered law. A 
subsequent violation of the covered order is therefore a ``second 
strike'' that is probative of risk to consumers. The Bureau believes 
that obtaining information about such matters through the written 
statement will facilitate its supervisory activities and its assessment 
and detection of risks to consumers. In addition, violation of any 
legally binding obligation may indicate that the entity lacks the 
willingness or ability more generally to comply with its legal 
obligations, including its obligations under the Federal consumer 
financial laws that the Bureau enforces. Thus, the submission of 
information about such violations, even allegedly minor ones, will 
assist the Bureau in ensuring that supervised registered entities are 
legitimate entities and are able to perform their obligations to 
consumers.
    The Bureau also declines to impose a reasonableness, good faith, or 
other standard regarding the steps that the attesting executive has 
undertaken to review and oversee the supervised registered entity's 
activities subject to the applicable covered order. The final rule does 
not impose any substantive requirements on supervised registered 
entities or attesting executives regarding such steps. Thus, there is 
no need for the final rule to establish a standard against which the 
Bureau will assess compliance with any such requirements. The Bureau 
intends to review the summary narrative portion of the written 
statement required in Sec.  1092.204(d)(1) for information regarding 
the executive's review. In addition, Sec.  1092.204(e) imposes related 
recordkeeping requirements with respect to the preparation of the 
written statement. The Bureau anticipates that these requirements will 
assist the Bureau in assessing the reliability of the written 
statement.
    For similar reasons, the Bureau declines to impose reasonableness 
or other standards with respect to the entity's efforts to identify 
applicable violations of covered orders. The final rule does not impose 
any substantive requirements on supervised registered entities with 
respect to such matters. For example, the final rule does not establish 
any minimum procedures or otherwise impose or specify steps a 
supervised registered entity must take in order to review or monitor 
compliance with any covered order. The Bureau will continue to assess 
such matters as part of its normal supervisory process where 
applicable.
    The Bureau disagrees that the written-statement requirements 
represent an attempt to enforce the orders or laws that are 
administered by other agencies (or by courts). The written-statement 
requirements are intended to promote the Bureau's own work by 
facilitating the Bureau's supervisory activities and its assessment and 
detection of risks to consumers, and by ensuring that supervised 
registered entities are legitimate entities and are able to perform 
their obligations to consumers. The Bureau is adopting these 
requirements for the purposes established by Congress. The Bureau does 
not agree with commenters' assertions that written-statement 
requirements to provide information about violations of a covered order 
constitute an effort to enforce that order. The written statement 
required under Sec.  1092.204(d) is not intended to monitor compliance 
by supervised registered entities with covered orders for the purpose 
of enforcing those orders. This

[[Page 56117]]

part of the written statement is intended to provide the Bureau with 
information regarding whether or not the entity violated the covered 
order during the preceding year. As described at part IV, that 
information will facilitate the Bureau's supervision of the supervised 
registered entity, help the Bureau detect and assess risks to 
consumers, and help ensure that supervised registered entities are 
legitimate entities and are able to perform their obligations to 
consumers. However, the Bureau does not intend to, and does not assert 
any authority to, enforce covered orders merely because of their 
covered order status. While certain covered orders--such as the 
Bureau's own orders--will be enforceable by the Bureau, others will not 
be. The final rule will not affect whether the Bureau may enforce the 
terms of any covered order.
    Some commenters expressed concern that the Bureau is overextending 
its authority by using the written-statement requirements in an effort 
to enforce State law. The written-statement requirement, however, does 
not seek to compel compliance with orders issued under State law. 
Instead, the written-statement requirement is an aid to assessing risks 
to consumers arising under Federal consumer financial law, including by 
considering the extent to which an entity is subject to oversight by 
State authorities.\413\ Although it is possible that, in some 
instances, the Bureau may review information submitted through the 
registry, including the written statements from attesting executives, 
and determine that supervisory action under Federal consumer financial 
law is necessary, the Bureau's review may also indicate that action 
under Federal law is unnecessary or should be a lower supervisory 
priority.
---------------------------------------------------------------------------

    \413\ See 12 U.S.C. 5514(b)(2)(D) (providing that, in 
prioritizing entities for supervision, the Bureau should consider 
``the extent to which such institutions are subject to oversight by 
State authorities for consumer protection''). As discussed in the 
section-by-section discussion of Sec.  1092.201(c) above, the Bureau 
declines to remove State laws from the final rule's definition of 
``covered law'' or to exempt covered orders issued under such laws 
from the scope of the written-statement requirements. As discussed 
in that section and in the proposal, the Bureau has determined that 
agency and court orders stemming from violations of these State laws 
will likely be probative of risk to consumers. The Bureau believes 
that it is important to impose the annual written-statement 
requirements on supervised registered entities that are subject to 
such covered orders.
---------------------------------------------------------------------------

    The Bureau believes it is important to obtain the information 
described in the final rule about supervised registered entities' 
ongoing compliance with relevant provisions of covered orders, 
including covered orders issued or obtained by State and local 
agencies. The Bureau believes that the written statement obligations in 
the final rule will not complicate or frustrate State enforcement 
efforts. The Bureau will not undermine the efforts of other regulators 
by collecting such information from entities subject to its 
jurisdiction related to the offering or provision of consumer financial 
products and services. As discussed above, the Bureau does not intend 
to, and does not assert any authority to, enforce covered orders not 
issued or obtained by the Bureau merely because of their covered order 
status. As stated in the proposal,\414\ evidence regarding a supervised 
registered entity's compliance with a covered order will provide the 
Bureau with important information regarding risks to consumers that may 
be associated with the order and will be highly relevant to the 
Bureau's own supervisory and enforcement efforts. State regulators 
conduct enhanced supervision and ongoing monitoring of companies that 
are subject to covered orders precisely because of the increased risk 
such orders represent. The Bureau agrees with the joint comment from 
State regulators that increased coordination and information sharing 
with the States regarding such orders will also facilitate the work of 
all regulators concerned, and the Bureau intends to use the information 
provided under the registry, including the written statement, so that 
it may be better informed about such orders and thus be in a better 
position to communicate with other regulators about them.
---------------------------------------------------------------------------

    \414\ See 88 FR 6088 at 6125.
---------------------------------------------------------------------------

    The additional reporting obligation in the final rule will not 
prevent or interfere with the efforts of supervised registered entities 
to comply with their other reporting obligations. Supervised registered 
entities can comply with their reporting requirements under Sec.  
1092.204(d) and other sources of law, much as supervised registered 
entities currently comply with Bureau supervisory requests for 
information under CFPA section 1024(b)(1) while also complying with 
other reporting requirements.\415\
---------------------------------------------------------------------------

    \415\ See 12 U.S.C. 5514(b)(1).
---------------------------------------------------------------------------

    The Bureau agrees with the industry commenter that registration 
under the NMLS system will provide information that may help lessen the 
need to submit an annual written statement to the Bureau under this 
section. As discussed in the section-by-section discussion of final 
Sec.  1092.203, the Bureau is adopting a provision that will provide an 
option for a supervised registered entity to file a one-time statement 
to the Bureau in lieu of complying with Sec.  1092.204's requirements 
with respect to a NMLS-published covered order.
    The Bureau declines to supplement the written-statement 
requirements beyond the requirements in the final rule. However, any 
supervised registered entity that wishes to discuss any matter relevant 
to Bureau supervision should contact the appropriate Bureau supervisory 
representative. To the extent that the supervised registered entity 
believes that the submission of such information would be useful or 
informative to the Bureau, it may use other channels to do so.
    The Bureau has considered alternative approaches to adopting the 
written-statement requirements for supervised registered entities. 
However, as discussed herein and in part IV(D), the Bureau finalizes 
its preliminary findings contained in the proposal \416\ that requiring 
supervised nonbanks to designate attesting executives and to submit 
certain written statements relating to compliance with reported orders 
will facilitate the Bureau's supervisory efforts and better ensure that 
supervised registered entities are legitimate entities and are able to 
perform their obligations to consumers. Among other things, as 
discussed herein and in part IV(D), the Bureau concludes that the 
adoption of the written-statement requirements will provide valuable 
information regarding the entities subject to Bureau supervision. The 
Bureau may use that information, including whether supervised 
registered entities have identified violations of covered orders 
registered under Sec.  1092.202, in conducting its supervisory 
prioritization efforts, assessing compliance systems and procedures, 
and detecting and assessing risk to consumers and to markets for 
consumer financial products and services. As described in parts VIII 
and IX, the Bureau has considered the potential benefits, costs, and 
impacts of the written-statement requirements in the final rule, 
including the potential benefit to consumers.
---------------------------------------------------------------------------

    \416\ 88 FR 6088 at 6100.
---------------------------------------------------------------------------

    Under the final rule, as proposed, Sec.  1092.204(d)(1) requires 
the written statement to contain only a general summary description of 
the attesting executive's actions, and thus does not impose a 
substantial new reporting requirement. This provision does not 
affirmatively require the executive to take any actions related to 
compliance with the covered order; it only requires the executive to 
provide the Bureau with a general description of what

[[Page 56118]]

applicable steps, if any, the executive has taken. The Bureau 
anticipates that this general description will generally be short and 
summary in nature. The Bureau concludes that such a statement will 
generally be sufficient to serve the purposes of this requirement and 
provide the information sought by the Bureau. This requirement will 
provide valuable context regarding the basis of the attesting 
executive's knowledge and assist the Bureau with determining the degree 
to which the Bureau may rely on the written statement.
    Final Sec.  1092.204(d)(1) is not intended to provide the Bureau 
with a comprehensive understanding of a supervised registered entity's 
compliance systems or procedures. Instead, it is intended to enhance 
the usefulness of the written statement by providing valuable context 
regarding the basis of the attesting executive's knowledge and by 
assisting the Bureau with determining the degree to which the Bureau 
may relay on the written statement. To the extent the Bureau desires 
additional information regarding the supervised registered entity's 
activities or practices, the Bureau may utilize its other supervisory 
authorities.
    As expressly provided at final Sec.  1092.205(b), the written 
statement submitted under final Sec.  1092.204(d) will be treated as 
CFPB confidential supervisory information subject to the provisions of 
12 CFR part 1070. The Bureau disagrees that requiring submission of 
this confidential supervisory information via the nonbank registry will 
put the information at risk. The Bureau has adequate data safeguards to 
protect the written statement information that supervised registered 
entities provide to the Bureau under Sec.  1092.204(d). Such 
information will be protected by the Bureau's confidentiality 
regulations at 12 CFR part 1070, the Federal Trade Secrets Act, 18 
U.S.C. 1905, and other laws. In addition, the Bureau is subject to data 
breach requirements provided in the Federal Information Security 
Management Act (FISMA), applicable Office of Management and Budget 
(OMB) Memoranda, U.S. Department of Homeland Security (DHS) Binding 
Operational Directives, National Institute of Standards and Technology 
(NIST) Federal Information Processing Standards and documents, and 
other applicable guidance.
    To the extent that certain comments might be read as expressing 
concern that Sec.  1092.204(d) might require the submission of 
information protected by the attorney-client privilege or another legal 
privilege, the commenters do not identify any particular scenarios 
under which submission of privileged information might be required to 
comply with Sec.  1092.204(d), and as discussed in the section-by-
section discussion of Sec.  1092.201(d), the Bureau does not intend for 
the final rule to require the submission of privileged information to 
the nonbank registry.
    As discussed in part VIII below, the Bureau acknowledges that 
certain firms that are subject to covered orders and that lack adequate 
compliance systems may be forced to pay attesting executives a salary 
premium because of the written-statement requirements, but believes 
that there will be few such firms. The Bureau also disagrees with 
commenters' assertions that, for most covered nonbanks, the requirement 
for covered nonbanks to designate attesting executives for covered 
orders will discourage competent compliance and risk management 
personnel from serving in such roles. Neither Sec.  1092.204(b)'s 
designation requirements nor the publication of the name and title of 
the attesting executive as provided at Sec.  1092.205 will materially 
increase the legal obligations of such executives. As discussed 
elsewhere in this section, Sec.  1092.204(d) requires the submission 
only of certain limited statements on behalf of the supervised 
registered entity to the executive's knowledge. For most companies, 
this statement should be straightforward and noncontroversial. Thus, 
for most supervised registered entities, the Bureau does not agree with 
commenters' assertions that the proposed requirements would have a 
significant chilling effect on the hiring and retention of senior 
executives.
    The written-statement requirement does not violate the First 
Amendment. The final rule merely requires a factual disclosure 
regarding (1) the steps the attesting executive has taken to review and 
oversee the supervised registered entity's activities subject to the 
applicable covered order, and (2) whether, to the attesting executive's 
knowledge, the supervised registered entity during the preceding 
calendar year identified violations or other instances of noncompliance 
with the entity's obligations under such a covered order. It only 
requires that the written statement be made to the Bureau, not to the 
general public. The rule excludes the written statement from its 
publication requirements and expressly provides that the written 
statement ``will be treated as Bureau confidential supervisory 
information.'' The written-statement requirement will facilitate Bureau 
supervisory efforts. It bears no resemblance to the type of 
``Government-mandated pledge or motto'' that has been held to violate 
the First Amendment.\417\ Such a limited reporting requirement, 
especially one connected to extant conduct regulations, complies with 
the First Amendment.\418\
---------------------------------------------------------------------------

    \417\ Rumsfeld v. Forum for Academic & Institutional Rights, 
Inc., 547 U.S. 47, 61-62 (2006) (discussing W. Va. State Bd. of 
Educ. v. Barnette, 319 U.S. 624 (1943), and Wooley v. Maynard, 430 
U.S. 705 (1977)).
    \418\ See, e.g., Arkansas Times LP v. Waldrip, 37 F.4th 1386, 
1394 (8th Cir. 2022) (en banc) (holding that requirement that 
government contractors certify compliance with conduct-based 
regulations did not unconstitutionally compel speech); United States 
v. Arnold, 740 F.3d 1032, 1033-35 (5th Cir. 2014) (rejecting 
``compelled speech'' challenge to Federal sex-offender registration 
requirements); United States v. Conces, 507 F.3d 1028, 1040 (6th 
Cir. 2007) (holding that requiring responses to discovery requests 
did not violate First Amendment); United States v. Sindel, 53 F.3d 
874, 878 (8th Cir. 1995) (rejecting ``compelled speech'' challenge 
to providing information required by an IRS form).
---------------------------------------------------------------------------

    The Bureau disagrees with the industry commenter that the written-
statement requirements would be redundant because the applicable 
covered order, if issued under consent, would already have been signed 
by a company officer. A signature of a supervised registered entity's 
officer with respect to a covered consent order (such as on a 
stipulation or consent agreement) would not serve the purposes of Sec.  
1092.204's written-statement requirements. Among other things, there 
generally would be no requirement that such an executive would satisfy 
the criteria established under Sec.  1092.204(b); such an executive 
generally would not be designated on an annual basis, depriving the 
Bureau of relevant up-to-date information; an executive signature 
consenting to a covered order generally would not provide any of the 
information that would be submitted in the annual written statement 
required under Sec.  1092.204(d); and the other requirements 
established in Sec.  1092.204, including Sec.  1092.204(c) and (e), 
generally would not be imposed with respect to the covered order.
    Regarding the comment that the attestation described at Sec.  
1092.203(d)(2) should not be made by an executive but by the supervised 
registered entity itself, the written statement--as discussed above 
\419\--is a statement by the supervised registered entity. To be sure, 
Sec.  1092.204(d) requires the written statement to be made and signed 
``on behalf of the supervised registered entity'' by a particular 
individual agent, the attesting executive. Section 1092.204(b) 
establishes requirements for the entity's designation of its attesting

[[Page 56119]]

executive(s) to ensure that the person who signs the written statement 
has sufficient authority and access to all the relevant company 
stakeholders to ensure that the report--which is filed on behalf of the 
entity, not the individual executive--is as complete and accurate as 
possible.\420\ But the obligations under Sec.  1092.204 belong to 
supervised registered entities, not to particular individuals acting in 
their personal capacities.
---------------------------------------------------------------------------

    \419\ See the Bureau's response to certain comments regarding 
the Bureau's legal authority to impose written-statement 
requirements above.
    \420\ See 88 FR 6088 at 6121-22.
---------------------------------------------------------------------------

    The Bureau disagrees that Sec.  1092.204(d)(2) represents an 
inappropriate attempt to substitute the individual liability of the 
attesting executives for the liability of the supervised registered 
entities they represent. As discussed above, even for those covered 
orders that the Bureau is authorized to enforce, Sec.  1092.204(b)'s 
requirement to designate an attesting executive does not mean that the 
Bureau intends to hold that executive solely responsible for the 
entity's compliance with those covered orders. The final rule does not 
impose any additional requirements to take steps to address any covered 
order, nor does it establish any standards for imposing liability on 
any individual in connection with any covered order. Any individual 
accountability in connection with violations of such orders shall 
continue to be determined in accordance with existing law, which the 
final rule does not purport to change. Nor does the final rule affect 
the Bureau's existing approach to assessing board and management 
oversight at supervised registered entities.
    The Bureau disagrees that Sec.  1092.203(d)(2) would cause a 
supervised registered entity to place undue emphasis on compliance with 
covered orders, to the detriment of its other compliance 
responsibilities. As stated in part IV(A) above, agency and court 
orders are not suggestions. It is incumbent on supervised registered 
entities to comply with such orders and also manage their other 
responsibilities. As explained in the proposal,\421\ the Bureau 
believes, based on its experience and expertise, that most entities 
subject to covered orders endeavor in good faith to comply with them 
and will already have in place systems and procedures to help achieve 
such compliance. The Bureau thus believes that few entities would 
significantly alter their compliance systems, procedures, or priorities 
in response to Sec.  1092.204.\422\ Further, the risk of legal 
sanctions will likely deter entities from neglecting other legal 
obligations not associated with covered orders. The Bureau thus does 
not believe that Sec.  1092.204 will cause supervised registered 
entities to ignore other legal requirements not set forth in covered 
orders.
---------------------------------------------------------------------------

    \421\ See 88 FR 6088 at 6133.
    \422\ The final rule does not obligate supervised registered 
entities to spend an inordinate amount of time, or indeed any time 
at all, on compliance with covered orders. The final rule does not 
establish any minimum level of compliance management or expectations 
for compliance systems and procedures at supervised registered 
entities. It only requires such entities to report information about 
their compliance to the Bureau.
---------------------------------------------------------------------------

    For the reasons discussed in part IV and the section-by-section 
discussions of Sec.  1092.201(c) and (e) above, the Bureau concludes 
that the term ``covered order'' should include orders issued or 
obtained by agencies other than the Bureau. As discussed in part IV(D) 
and this section-by-section discussion of Sec.  1092.204, submission of 
a written statement regarding either compliance or noncompliance with 
covered orders will provide the Bureau with important additional 
information regarding risks to consumers that may be associated with 
the orders and the applicable supervised registered entities' 
compliance systems and procedures, and will otherwise facilitate the 
Bureau's supervision of such entities. The Bureau disagrees with 
commenters' assertions that the Bureau lacks a legitimate interest in 
obtaining such information from entities that are subject to its 
supervisory and examination jurisdiction under CFPA section 1024.
    With respect to the comments stating that it would be impossible 
for an executive to attest that a supervised entity had complied with a 
broadly drafted covered order, including orders based on violations or 
alleged violations of Federal or State UDAP/UDAAP laws, final Sec.  
1092.204(d) does not require that the supervised registered entity 
prove its compliance with the covered order to the Bureau, as discussed 
above. Section 1092.204(d)(1) requires the executive to generally 
describe the steps that the attesting executive has undertaken to 
review and oversee the supervised registered entity's activities 
subject to the applicable covered order for the preceding calendar 
year, but imposes no minimum standards or other requirements regarding 
those steps. And all the entity need disclose under Sec.  
1092.204(d)(2) is whether, to the attesting executive's knowledge, the 
supervised registered entity during the preceding calendar year 
identified any violations or other instances of noncompliance with any 
obligations that were imposed in a public provision of the covered 
order by the applicable agency or court based on a violation of a 
covered law. Such matters are within the power of the supervised 
registered entity and its attesting executive to know and describe to 
the Bureau, and will provide important information that is useful to 
the Bureau. Should the Bureau desire additional information relating to 
the covered order or the supervised registered entity's compliance with 
the covered order, the Bureau may choose to follow up on the 
information provided by the supervised registered entity in its written 
statement, including via its supervisory and examination authority or 
by communicating with the appropriate agency.
    The Bureau declines to adopt the alternative approach proposed in 
the notice of proposed rulemaking that the written statement contain a 
short description of the entity's compliance systems and procedures 
relating to the covered order.\423\ The Bureau concludes the written-
statement requirements included in the final rule will provide 
sufficient information to the Bureau to serve the purposes of the 
written-statement requirement. The written statement will provide 
valuable information to the Bureau regarding the entity's attesting 
executive for each applicable covered order, the steps undertaken by 
that executive to review and oversee compliance with the covered order, 
and any applicable recent violations of the order identified by the 
supervised registered entity. To the extent the Bureau desires to 
obtain more information about the entity's compliance systems or 
procedures than is provided in the written statement, the Bureau may 
choose to follow up directly with the supervised registered entity 
through its supervisory authority or through other means. The Bureau 
does not believe it is necessary at this time to require all supervised 
registered entities to submit a description of the entity's relevant 
compliance systems and procedures on an annual basis, or to dedicate 
staff and other Bureau resources to reviewing such submissions.
---------------------------------------------------------------------------

    \423\ See 88 FR 6088 at 6126.
---------------------------------------------------------------------------

    Likewise, the Bureau declines to adopt the alternative approach 
proposed by the commenter to obtain a single representation about all 
covered orders to which the entity is subject. The Bureau believes that 
requiring a separate written statement for each covered order will be 
more likely to provide the Bureau with meaningful and useful 
information regarding the covered order, the entity's compliance with 
that covered order, other risks to consumers

[[Page 56120]]

that are related to that covered order, and other matters. The Bureau 
also believes this proposed alternative is inconsistent with the 
approach to designation of attesting executives taken under Sec.  
1092.204(b). As described in the proposal,\424\ the Bureau believes it 
is desirable to require a supervised registered entity to annually 
designate one attesting executive for each applicable covered order to 
which it is subject and for all submissions and other purposes related 
to that covered order under subpart B. If an entity has designated 
multiple attesting executives under the rule, the Bureau would not 
necessarily expect each such executive to be able to provide a 
meaningful attestation with respect to all covered orders. See part IV 
above for additional discussion of these issues.
---------------------------------------------------------------------------

    \424\ See 88 FR 6088 at 6123.
---------------------------------------------------------------------------

    With respect to the comment opposing the adoption of this proposed 
alternative, while the Bureau does not necessarily agree with the 
industry commenter's assertion that the proposed alternative would fail 
to provide adequate or accurate information to the Bureau, the Bureau 
believes the written-statement requirements included in the final rule 
will provide sufficient information to the Bureau to serve the purposes 
of the written-statement requirement. Regarding the inclusion of 
confidential information in the written statement, the Bureau expects 
that the written statement may contain certain confidential information 
about the entity and its compliance system or procedures. Anticipating 
this issue, the final rule treats the written statement as Bureau 
confidential supervisory information (Sec.  1092.205(b)) and would not 
publish it. As discussed in the section-by-section discussion of Sec.  
1092.205(b), this approach will enhance the usefulness of submissions 
under final Sec.  1092.204(d)(1) and (2), increase the Bureau's ability 
to detect and assess potential noncompliance and emerging risks to 
consumers, and promote compliance with the law.
    With respect to the comments stating that the Bureau should use its 
existing supervisory authorities instead of imposing the written-
statement requirements, the Bureau disagrees to the extent the comments 
suggest that the Bureau should collect written statements only in 
connection with particular examinations via direct communication with 
supervised registered entities. Such an approach would not be more 
reliable and predictable for all parties than a rule-based approach, 
and would be less administrable for the Bureau. The approach adopted in 
the final rule will structure the information collected and establish a 
regular cadence for collecting it. This approach also will enable the 
Bureau to more readily utilize this information, as it will be linked 
via the nonbank registry to the other information submitted by the 
relevant supervised registered entity regarding the applicable covered 
order.\425\
---------------------------------------------------------------------------

    \425\ See also part IV(D) above.
---------------------------------------------------------------------------

    In addition, there is no existing comprehensive list of nonbank 
entities subject to Bureau supervision, so the Bureau would be unable 
to issue a standing order to such entities to produce such information. 
The final rule requires supervised registered entities, within the 
timeframes established by the rule, to identify themselves to the 
Bureau and to provide information that is relevant to the Bureau's 
assessment and detection of risks to consumers related to such 
entities. As discussed in part IV(D) above, the collection of this 
information will facilitate Bureau supervision by, among other things, 
helping the Bureau identify when a nonbank entity subject to its 
supervisory authority is subject to a covered order, and by annually 
collecting information about the entity's compliance with the covered 
orders to which it is subject. This information will in turn help the 
Bureau prioritize its nonbank examinations under CFPA section 
1024(b)(2) and otherwise inform how the Bureau supervises and examines 
the entity. As appropriate, the Bureau may also, as one commenter 
suggests, obtain more detailed and comprehensive information about the 
entity's compliance systems and procedures for complying with the order 
via direct communication with the entity through the supervisory 
process.
    See the section-by-section discussion of Sec.  1092.201(e) above 
regarding the final rule's treatment of covered orders that may be 
subject to appeal.
Final Rule
    The Bureau adopts Sec.  1092.203(d) as proposed (renumbered as 
Sec.  1092.204(d)) for the reasons discussed above and in the 
description of the proposal, with changes to the wording of the 
paragraph's first sentence.\426\ That sentence now reads (with 
additions marked with italics): ``On or before March 31 of each 
calendar year, the supervised registered entity shall, in the form and 
manner specified by the Bureau, submit to the nonbank registry a 
written statement with respect to each covered order described in 
paragraph (a)(1) of this section to which it is subject.'' \427\ The 
changes reflect revisions to Sec.  1092.204(a) that are discussed in 
the section-by-section analysis of that subsection (as well as the 
Bureau's adoption of the term ``nonbank registry'' described in the 
section-by-section discussion of Sec.  1092.101(d) above).
---------------------------------------------------------------------------

    \426\ See also the section-by-section discussion of Sec.  
1092.101(d) above regarding the Bureau's adoption of the revised 
term ``nonbank registry.''
    \427\ Under Sec.  1092.204(a)(2), a supervised registered entity 
is not required to comply with Sec.  1092.204--including the 
requirements of Sec.  1092.204(d)(2)--with respect to any NMLS-
published covered order for which it has chosen to comply with the 
one-time registration option described in Sec.  1092.203.
---------------------------------------------------------------------------

    Under Sec.  1092.204(d) of the final rule, written statements only 
need to address periods during which covered nonbanks qualify as 
supervised registered entities. Therefore, if a covered nonbank did not 
qualify as a supervised registered entity at any point during the 
preceding calendar year, it does not need to file a written statement 
in the current calendar year, even if the covered nonbank becomes a 
supervised registered entity by March 31 of the current calendar year.
Section 1092.204(e) Requirement To Maintain and Make Available Related 
Records
Proposed Rule
    Proposed Sec.  1092.203(e) would have imposed recordkeeping 
requirements with respect to the preparation of the written statement. 
These requirements were designed to promote effective and efficient 
enforcement and supervision of proposed Sec.  1092.203. The Bureau 
would have relied on its rulemaking authorities under CFPA section 
1024(b)(7)(A)-(C) in imposing proposed Sec.  1092.203(e)'s 
recordkeeping requirements.
    Proposed Sec.  1092.203(e) would have required a supervised 
registered entity to maintain documents and other records sufficient to 
document the entity's preparation of the written statement, to provide 
reasonable support for the written statement, and to otherwise 
demonstrate compliance with the requirements of proposed Sec.  1092.203 
with respect to any submission under that section. The proposed section 
would have required the supervised registered entity to maintain those 
documents and records for five years after such submission was 
required. The proposal would have also required the supervised 
registered entity to make such documents and other records available to 
the Bureau upon the Bureau's request. The Bureau explained that the 
purpose of this requirement would be to enable the Bureau to assess, as 
part of its normal supervisory

[[Page 56121]]

process, the supervised registered entity's compliance with proposed 
Sec.  1092.203. The Bureau explained that it expected such documents 
and other records to be in a form sufficient to enable the Bureau to 
conduct this assessment. The Bureau believed that the five-year time 
period would appropriately facilitate the Bureau's examination and 
enforcement capabilities with respect to compliance with proposed Sec.  
1092.203's requirements.
Comments Received
    One industry commenter stated that the requirement to ``provide 
reasonable support'' for the written statement was vague and overly 
broad, and that it could extend to every record that a company has. 
Relatedly, the commenter stated that the costs associated with this 
requirement could not be quantified as a result of this uncertainty.
    The commenter also stated that the proposed recordkeeping 
requirement would be unduly burdensome because it would require a 
supervised registered entity to maintain evidence of compliance with 
covered orders. And the commenter objected to the duration of the 
recordkeeping requirement, as the five-year obligation imposed under 
proposed Sec.  1092.203(e) might exceed the duration of the 
requirements imposed by the other provisions of the proposal (such as 
where the order terminates earlier). The commenter also stated the 
Bureau should have considered obtaining documents from other regulators 
as an alternative to proposed Sec.  1092.203.
Response to Comments Received
    The Bureau disagrees with the industry commenter's statement that 
the requirements of Sec.  1092.204(e) (which was initially proposed as 
Sec.  1092.203(e)) are vague and overly broad, and that an estimate of 
the costs associated with those requirements cannot be quantified. 
Section 1092.204(e) does not require a supervised registered entity to 
comply with any covered order, nor does it require the entity to prove 
that it is in compliance with any covered order. Instead, Sec.  
1092.204(e) requires the entity to maintain documents sufficient to 
allow the Bureau, through its normal supervisory process, to review the 
entity's compliance with the requirements of Sec.  1092.204 with 
respect to a submission under that section. Thus, Sec.  1092.204(e) 
requires a supervised registered entity to maintain documents that 
demonstrate compliance with the various paragraphs of Sec.  1092.204.
    Specifically, a supervised registered entity would satisfy Sec.  
1092.204(e) with respect to the requirements of Sec.  1092.204(b) 
regarding the designation of an attesting executive for a particular 
covered order by maintaining records that reasonably support the 
entity's designation, including records that demonstrate that the 
attesting executive satisfies the criteria established by Sec.  
1092.204(b).
    Section 1092.204(d)(1) requires the attesting executive to 
``[g]enerally describe the steps that the attesting executive has 
undertaken to review and oversee the supervised registered entity's 
activities subject to the applicable covered order for the preceding 
calendar year.'' A supervised registered entity would satisfy Sec.  
1092.204(e) with respect to a statement submitted under Sec.  
1092.204(d)(1) by maintaining documents that reasonably support the 
description submitted. If the entity chooses to submit a statement 
under Sec.  1092.204(d)(1) that describes specific steps undertaken by 
the attesting executive to review and oversee the entity's applicable 
activities, Sec.  1092.204(e) would require that the entity maintain 
documents that demonstrate that the executive undertook the steps 
described. For example, the entity could preserve relevant reports 
provided to the executive regarding compliance with the relevant order, 
or emails that demonstrate the questions asked by the executive as part 
of the executive's review.
    Section 1092.204(d)(2) requires the attesting executive to 
``[a]ttest whether, to the attesting executive's knowledge, the 
supervised registered entity during the preceding calendar year 
identified any violations or other instances of noncompliance with any 
obligations that were imposed in a public provision of the covered 
order by the applicable agency or court based on a violation of a 
covered law.'' If, to the executive's knowledge, the entity did 
identify such a violation, the executive should so attest under Sec.  
1092.204(d)(2), and the entity should maintain records sufficient to 
provide reasonable support for the executive's statement. For example, 
the entity could preserve relevant documents that caused the executive 
to know that a violation had occurred, such as a report or email sent 
to the executive. On the other hand, if the executive attests that he 
or she does not know of any such violation, the Bureau anticipates that 
attestation will generally be based upon the executive's review and 
oversight as described in the portion of the written statement 
submitted under Sec.  1092.204(d)(1). By demonstrating what steps (if 
any) the executive had undertaken to review and oversee the activities 
subject to the covered order, the entity generally would also provide 
support for the statement that the executive was not aware of 
applicable violations. Thus, in such cases the Bureau would generally 
expect the documentation that supports the portion of the written 
statement submitted under Sec.  1092.204(d)(1) also to adequately 
support the portion submitted under Sec.  1092.204(d)(2), and Sec.  
1092.204(e) would generally not require the entity to maintain any 
other additional records specifically in connection with the portion of 
the written statement submitted under Sec.  1092.204(d)(2).
    With respect to the comment regarding potential burden associated 
with Sec.  1092.204(e)'s recordkeeping requirements, this provision 
would not require a supervised registered entity to maintain documents 
to enable the Bureau to assess whether the entity is in compliance with 
any covered order. Instead, this provision would require a supervised 
registered entity to maintain documents that demonstrate compliance 
with Sec.  1092.204 itself. Section 1092.204 imposes a set of 
requirements regarding the designation of one or more attesting 
executives and submission of one or more annual reports. It requires 
neither that the entity comply with any covered order nor that it 
demonstrate to the Bureau that it is in compliance with any covered 
order. Documents that demonstrate the entity's compliance with Sec.  
1092.204 will not generally be available from other regulators or from 
sources other than the entity itself.
    The Bureau acknowledges that in some cases, a supervised registered 
entity's obligation to maintain documents under Sec.  1092.204(e) may 
extend, perhaps by several years, past the time required for the 
entity's final filing under Sec.  1092.202(f)(1). While, as provided in 
Sec.  1092.202(f)(2), a supervised registered entity's final filing 
under Sec.  1092.202(f)(1) relieves the entity of its obligations to 
update its filing or to file written statements with respect to the 
applicable covered order under subpart B, the entity would remain 
subject to Sec.  1092.204(e)'s requirements to maintain and make 
available applicable records. Nevertheless, the Bureau believes Sec.  
1092.204(e)'s five-year recordkeeping requirement is consistent with 
the final rule's approach to final filings in Sec.  1092.202(f). The 
purpose of Sec.  1092.204(e)'s recordkeeping requirement is to promote 
effective and efficient enforcement and supervision of Sec.  1092.204. 
The Bureau may wish to review a supervised registered entity's

[[Page 56122]]

past compliance with Sec.  1092.204 even after the entity has been 
released, as provided under Sec.  1092.202(f)(2), from its ongoing 
obligations to update information under Sec.  1092.202 and to file 
annual written statements under Sec.  1092.204. The Bureau believes the 
five-year period is an appropriate length of time to require 
preservation of records in order to facilitate any review that may 
occur. For a discussion of the economic costs and benefits associated 
with this provision, see part VIII.
Final Rule
    The Bureau adopts Sec.  1092.203(e) as proposed (renumbered as 
Sec.  1092.204(e)) for the reasons discussed above and in the 
description of the proposal.
Section 1092.204(f) Notification of Entity's Good-Faith Belief That 
Requirements Do Not Apply
Proposed Rule
    Proposed Sec.  1092.203(f) would have provided that a person may 
submit a notice to the NBR system stating that it is neither 
designating an attesting executive nor submitting a written statement 
pursuant to proposed Sec.  1092.203 because it has a good-faith basis 
to believe that it is not a supervised registered entity or that an 
order in question is not a covered order. Such a filing may be combined 
with any similar filing under proposed Sec.  1092.202(g).\428\ Proposed 
Sec.  1092.203(f) would have also required the person to promptly 
comply with Sec.  1092.203 upon becoming aware of facts or 
circumstances that would not permit it to continue representing that it 
has a good-faith basis to believe that it is not a supervised 
registered entity or that an order in question is not a covered order. 
The Bureau proposed to treat information submitted under Sec.  
1092.203(f) as ``administrative information'' as defined by proposed 
Sec.  1092.201(a).
---------------------------------------------------------------------------

    \428\ See also the section-by-section discussion of Sec.  
1092.202(g), which provides a similar option with respect to Sec.  
1092.202.
---------------------------------------------------------------------------

    The Bureau proposed Sec.  1092.203(f) for several reasons. First, 
while the Bureau believed that determining whether a company qualifies 
as a ``supervised registered entity'' (or whether an order is a covered 
order) should be straightforward in most cases, some persons may be 
uncertain about whether they are a supervised registered entity (or 
whether an order is a covered order). The Bureau acknowledged in its 
proposal that even when they have a good-faith basis to believe they 
are not a supervised registered entity (or an order is not a covered 
order), they could annually designate an attesting executive and file 
annual written statements if they did not want to incur the risk of 
violating the requirements of proposed Sec.  1092.203. But the Bureau 
believed that that approach could impose burden on persons who 
ultimately are not supervised registered entities (or whose orders are 
not covered orders). The Bureau therefore proposed an alternative 
option for these persons. Rather than facing the burden of designating 
an attesting executive and filing written statements, such an entity 
could have elected to file a notice under proposed Sec.  1092.203(f). 
The Bureau explained that, when a person makes a non-frivolous filing 
under proposed Sec.  1092.203(f) stating that it has a good-faith basis 
to believe that it is not a supervised registered entity (or an order 
is not a covered order), the Bureau would not bring an enforcement 
action against that person based on the person's failure to comply with 
proposed Sec.  1092.203 unless the Bureau has first notified the person 
that the Bureau believes the person does in fact qualify as a 
supervised registered entity (or the order in question qualifies as a 
covered order) and has subsequently provided the person with a 
reasonable opportunity to comply with proposed Sec.  1092.203.\429\
---------------------------------------------------------------------------

    \429\ The Bureau explained that, under proposed Sec.  
1092.102(c), the filing of a notification under proposed Sec.  
1092.203(f) would not affect the entity's ability to dispute more 
generally that it qualifies as a person subject to Bureau authority.
---------------------------------------------------------------------------

    The Bureau also believed that filings under proposed Sec.  
1092.203(f) may reduce uncertainty by the Bureau about why certain 
entities are not designating an attesting executive or providing a 
written statement under proposed Sec.  1092.203. In addition, the 
Bureau believed that these notifications might provide the Bureau with 
information about how market participants are interpreting the scope of 
proposed Sec.  1092.203, about the potential need for the Bureau to 
instruct certain persons to designate an attesting executive and 
provide written statements, and about the potential need for guidance 
or rulemaking clarifying the scope of proposed Sec.  1092.203.
    As in the case of proposed Sec.  1092.202(g), the Bureau considered 
an alternative to proposed Sec.  1092.203(f) under which entities would 
not file a notice with the Bureau, but they could avoid penalties for 
non-compliance with Sec.  1092.203 if in fact they could establish a 
good-faith belief that they did not qualify as supervised registered 
entities subject to Sec.  1092.203 (or their order was not a covered 
order). Under this alternative, entities would have maintained such 
good-faith belief so long as the Bureau had not made clear that Sec.  
1092.203 would apply to them. Although the Bureau preliminarily 
concluded that this alternative was not preferable to requiring 
entities to actually file notices under proposed Sec.  1092.203(f), the 
Bureau sought comment on whether it should finalize this alternative 
instead. It also sought comment on whether, if it finalized this 
alternative, entities would require additional guidance on the 
circumstances pursuant to which an entity could no longer legitimately 
assert a good-faith belief that Sec.  1092.203 would not apply to its 
conduct. While the Bureau anticipated that such circumstances would 
certainly include entity-specific notice from the Bureau that Sec.  
1092.203 applies, the Bureau did not believe such notice should be 
required to terminate a good faith defense to registration. Among other 
circumstances, the Bureau anticipated that at least formal Bureau 
interpretations of (for example) the provisions of CFPA section 
1024(a)(1) would generally suffice to terminate such belief.\430\
---------------------------------------------------------------------------

    \430\ 12 U.S.C. 5514(a)(1).
---------------------------------------------------------------------------

Comments Received
    As discussed in the section-by-section discussion of Sec.  
1092.202(g) above, the Bureau received a number of comments from tribes 
regarding proposed Sec. Sec.  1092.202(g) and 1092.203(f). The tribes 
commenting on the proposal generally opposed proposed Sec. Sec.  
1092.202(g) and 1092.203(f) and submitted specific objections to 
aspects of the proposal.
Response to Comments Received
    See the section-by-section discussion of Sec.  1092.202(g) above 
for a description of the Bureau's responses to comments received 
regarding proposed Sec.  1092.203(f).
Final Rule
    The Bureau adopts Sec.  1092.203(f) as proposed (renumbered as 
Sec.  1092.204(f)) for the reasons discussed above and in the 
description of the proposal.\431\
---------------------------------------------------------------------------

    \431\ See the section-by-section discussion of Sec.  1092.101(d) 
above regarding the Bureau's adoption of the revised term ``nonbank 
registry.''

---------------------------------------------------------------------------

[[Page 56123]]

Section 1092.205 Publication and Correction of Registration Information

Section 1092.205(a) Internet Posting of Registration Information
Proposed Rule
Proposed Sec.  1092.204(a)
    Proposed Sec.  1092.204(a) would have required the Bureau to make 
available to the public the information submitted to it by persons 
pursuant to proposed Sec.  1092.202, except that the Bureau could 
choose not to publish certain administrative information or other 
information that the Bureau determined may be inaccurate, not required 
to be submitted under subpart B, or otherwise not in compliance with 
part 1092 and any accompanying guidance. Proposed Sec.  1092.204(a) 
would have further provided that the Bureau may make registration 
information available to the public by means that include publishing it 
on the Bureau's publicly available internet site within a timeframe 
determined by the Bureau in its discretion. However, as discussed below 
regarding proposed Sec.  1092.204(b), the proposal would have 
specifically provided that the Bureau would not disclose the written 
statement submitted under proposed Sec.  1092.203.
    The Bureau explained that publication of registered entities' 
identifying information would facilitate the ability of consumers to 
identify covered persons that are registered with the Bureau.\432\ And 
the Bureau believed that publication of additional information about 
registered entities and covered orders would be in the public 
interest.\433\ Namely, as discussed in more detail in section IV(E) of 
the proposal's preamble, proposed Sec.  1092.204(a) would have provided 
information of use to consumers, other regulators, industry, 
nongovernment organizations, and the general public. Proposed Sec.  
1092.204(a) also would have formally aligned the proposed NBR system 
with Federal Government emphasis on making government data available to 
and usable by the public, by default, to the greatest extent 
possible.\434\
---------------------------------------------------------------------------

    \432\ 12 U.S.C. 5512(c)(7)(B).
    \433\ 12 U.S.C. 5512(c)(3)(B).
    \434\ See, e.g., Open, Public, Electronic, and Necessary 
Government Data Act, in title II of Public Law 115-435 (Jan. 14, 
2019); Office of Management and Budget, M-19-18, Federal Data 
Strategy--A Framework for Consistency (June 4, 2019), https://www.whitehouse.gov/wp-content/uploads/2019/06/M-19-18.pdf.
---------------------------------------------------------------------------

    The Bureau explained that making the data collected publicly 
available would further the rationale of the proposal--that is, 
enhancing oversight and awareness of covered orders and the covered 
nonbanks that are subject to them. The Bureau believed that regulators 
and other agencies at all levels of government (not just the Bureau) 
could use the information the Bureau would make publicly available to 
set priorities. The Bureau believed publication was also in the public 
interest because researchers could analyze the information the Bureau 
would make publicly available to gain valuable insight into the issues 
addressed in the NBR system. For example, as the Bureau explained in 
its proposal, they could produce reports that may inform consumers and 
the public more broadly of potential risks related to covered orders, 
or otherwise use the public data to promote private innovation. The 
Bureau also believed that organizations representing consumer interests 
could use the information to assist with their consumer protection 
efforts. The Bureau further explained in its proposal that publication 
can also help inform the public, including industry actors, about how 
regulators are enforcing Federal consumer financial laws and other 
similar laws. The Bureau cited, for example, that industry actors could 
use the registry as a convenient source of information regarding 
regulator actions and trends across jurisdictions, helping them to 
better understand legal risks and compliance obligations. The Bureau 
believed that at least in certain cases, consumers may be able to use 
the information in the registry to make informed choices regarding 
consumer financial products and services, including potentially using 
the information to assist with the assertion of private rights of 
action that might be available under the Federal consumer financial 
laws. Finally, the Bureau believed that publication would help promote 
Bureau accountability by helping the public better see and understand 
the results of the nonbank registry initiative, and helping the public 
gain greater insight into Bureau decision-making. As discussed in 
section IV(E) of the proposal, the Bureau believed that identifying the 
executive who has knowledge and control of the supervised entity's 
efforts to comply with the covered order would provide particular 
benefits to the Bureau, the public, and other users of the registry.
    Proposed Sec.  1092.204(a) would have provided that the Bureau may 
choose not to publish certain administrative information or other 
information that the Bureau determines may be inaccurate, not required 
to be submitted under proposed subpart B, or otherwise not in 
compliance with part 1092 and any accompanying guidance. The Bureau 
proposed to exclude administrative information, as defined at proposed 
Sec.  1092.201(a), from the proposed publication requirement because it 
believed the publication of such information may not in all instances 
be especially useful to external users of the registry. The Bureau 
explained that administrative information is likely to include 
information such as time and date stamps, contact information, and 
administrative questions. The Bureau anticipated that it may need such 
information to work with personnel at nonbanks and in order to 
administer the NBR system. The Bureau believed that publishing such 
information would not be in the public interest because publication 
would be unnecessary and likely would be counterproductive to the goals 
of ensuring compliance with the proposal and publishing usable 
information.
    The Bureau would have also reserved the right not to publish any 
information that it determines may be inaccurate, not required to be 
submitted under proposed subpart B, or otherwise not in compliance with 
part 1092 and any accompanying guidance. For example, the Bureau 
explained, persons may submit unauthorized or inadvertent filings, or 
filings regarding orders that would not require registration under the 
proposal, or other inaccurate or inappropriate filings. The Bureau 
believed it would require flexibility not to publish such information 
in order to maintain the accuracy and integrity of the NBR system and 
the data that would be published by the Bureau. And publication of 
information that the Bureau determines is, or may be, inaccurate, not 
required to be submitted under proposed subpart B, or that is otherwise 
not appropriately submitted under the proposal and accompanying 
guidance, would not further the goals of the proposal.
    Furthermore, consistent with CFPA section 1022(c)(8),\435\ the 
Bureau explained that it would not publish information protected from 
public disclosure under 5 U.S.C. 552(b) or 552a or any other provision 
of law. The Bureau, however, did not believe that any of the 
information proposed to be

[[Page 56124]]

collected under proposed Sec.  1092.202 would be protected from public 
disclosure by law. The Bureau requested comments on this question, and 
whether any other steps should be taken to protect this information 
from public disclosure.
---------------------------------------------------------------------------

    \435\ 12 U.S.C. 5512(c)(8) (``In . . . publicly releasing 
information held by the Bureau, or requiring covered persons to 
publicly report information, the Bureau shall take steps to ensure 
that proprietary, personal, or confidential consumer information 
that is protected from public disclosure under [the FOIA] or [the 
Privacy Act of 1974, 5 U.S.C. 552a,] or any other provision of law, 
is not made public under [the CFPA].'').
---------------------------------------------------------------------------

    The Bureau recognized that by relying in part on its supervisory 
authority in section 1024 of the CFPA to require submission of 
information to the nonbank registry, registry information could be 
construed to be ``confidential supervisory information'' as defined in 
the Bureau's confidentiality rules at 12 CFR 1070.2(i). The Bureau 
stated that, under the proposal, public release of information pursuant 
to Sec.  1092.204(a) would have been authorized by the Bureau's 
confidentiality rules at 12 CFR 1070.45(a)(7), which permits the Bureau 
to disclose confidential information ``[a]s required under any other 
applicable law.'' The Bureau did not believe that the information 
proposed to be published under Sec.  1092.204(a) would have raised the 
concerns generally addressed by the Bureau's restrictions on disclosure 
of confidential supervisory information. For example, the Bureau 
anticipated that the information collected pursuant to Sec.  1092.202 
would otherwise be subject to disclosure under the Freedom of 
Information Act and would not be particularly sensitive to financial 
institutions or compromise any substantial privacy interest; that 
disclosure of the information would not impede the confidential 
supervisory process; and that disclosure would not present risks to the 
financial system writ large.
Proposed Sec.  1092.204(b)
    Proposed Sec.  1092.204(b) would have provided that the publication 
described in proposed Sec.  1092.204(a) would not have included the 
written statement submitted under proposed Sec.  1092.203, and that 
such information would be treated as confidential supervisory 
information subject to the provisions of part 1070. The Bureau proposed 
to require the submission of the written statement pursuant to CFPA 
section 1024(b)(7), which authorizes the Bureau to prescribe rules 
regarding registration, recordkeeping, and other requirements for 
covered persons subject to its supervisory authority under CFPA section 
1024. The Bureau believed that treating the written statements that it 
would receive under proposed Sec.  1092.203 as confidential, and not 
publishing them under proposed Sec.  1092.204, would facilitate the 
Bureau's supervision of supervised registered entities by enabling the 
Bureau to obtain frank and candid assessments and other information 
from supervised registered entities regarding violations and 
noncompliance in connection with covered orders. The Bureau believed 
this information in turn would better enable the Bureau to spot 
emerging risks, focus its supervisory efforts, and address underlying 
issues regarding noncompliance, compliance systems and processes, and 
risks to consumers.
    The Bureau recognized that there may have been some benefit to 
other users of the NBR system from publishing the written statements 
that it would receive under proposed Sec.  1092.203, including 
enhancing the ability of other agencies and affected consumers to 
monitor compliance. However, the Bureau believed that these potential 
benefits were likely to be outweighed by increased candor and 
compliance with proposed Sec.  1092.203. The Bureau noted that its 
supervision program depends upon the full and frank exchange of 
information with the institutions it supervises. The Bureau explained 
that, consistent with the policies of the prudential regulators, the 
Bureau's policy is to treat information obtained in the supervisory 
process as confidential and privileged.\436\ For example, the Bureau 
explained in its proposal that it would treat all such information as 
exempt from disclosure under exemption 8 of the Freedom of Information 
Act.\437\ The Bureau believed that these considerations would also 
underlie supervisory communications with supervised registered entities 
under proposed Sec.  1092.203, and that the proposed approach would 
enhance the usefulness of submissions under proposed Sec.  1092.203, 
increase the Bureau's ability to detect and assess potential 
noncompliance and emerging risks to consumers, and promote compliance 
with the law.\438\
---------------------------------------------------------------------------

    \436\ See CFPB Compliance Bulletin 2015-01 (Jan. 27, 2015), 
https://files.consumerfinance.gov/f/201501_cfpb_compliance-bulletin_treatment-of-confidential-supervisory-information.pdf; CFPB 
Bulletin 2012-01 (Jan. 4, 2012), https://files.consumerfinance.gov/f/2012/01/GC_bulletin_12-01.pdf. Also consistent with the policies 
of the prudential regulators, the Bureau recognized that the sharing 
of confidential supervisory information with other government 
agencies may in some circumstances be appropriate, and in some 
cases, required. See id. For example, in accordance with the scheme 
of coordinated supervision established by Congress, the Bureau's 
policy is to share confidential supervisory information with the 
prudential regulators and State regulators that share supervisory 
jurisdiction over an institution supervised by the Bureau. See id.
    \437\ See 5 U.S.C. 552(b)(8).
    \438\ Proposed Sec.  1092.102(c) would have provided that 
proposed part 1092 would not alter applicable processes whereby a 
person may dispute that it qualifies as a person subject to Bureau 
authority. The Bureau believed written statements submitted to the 
NBR system under Sec.  1092.203 of the proposed rule (renumbered to 
Sec.  1092.204 of the final rule) would constitute Bureau 
confidential supervisory information under the regulatory definition 
of that term even if the submitter later disputed that it qualified 
as a person subject to the Bureau's supervisory authority. See 12 
CFR 1070.2(i) (defining Bureau confidential supervisory 
information), (q) (``Supervised financial institution means a 
financial institution that is or that may become subject to the 
Bureau's supervisory authority.'').
---------------------------------------------------------------------------

Comments Received
Comments Received Regarding Proposed Sec.  1092.204(a)
    General comments received regarding publication.
    Many commenters opposed the proposal's approach to publication of 
registry information, and either questioned whether the proposed public 
registry was necessary or opposed publication of the registry. 
Commenters stated that the proposed publication of the registry 
information would create a much more elevated level of scrutiny and 
risk for covered nonbanks subject to covered orders.
    Consumer advocate commenters and some industry and individual 
commenters generally supported the publication of the registry, stating 
that it would provide a valuable resource to help regulators and 
consumers. A consumer advocate commenter stated that the public 
registry would be immensely useful for the Bureau and other Federal and 
State regulators alike, and another consumer advocate commenter stated 
that it would unify the efforts of the various enforcers of consumer 
protection laws. A consumer advocate commenter stated that the public 
registry would be particularly beneficial for low-income consumers. A 
consumer advocate commenter agreed that making the proposed registry 
public would enhance the ability of consumer advocacy organizations 
conducting due diligence, and would better equip organizations to warn 
consumers against companies with patterns or practices of illegal or 
otherwise harmful behaviors. The consumer advocate commenter also 
stated that searchable public databases like the proposed registry 
empower consumers, regulators, and consumer advocates, and that the 
registry would help protect older Americans and all consumers as well 
as benefit Bureau supervision. Consumer advocate commenters stated the 
information obtained from the public registry would also assist the 
Bureau and other regulators in developing new regulations and other 
reforms for consumer protection. Consumer advocate and industry 
commenters stated that the public registry would

[[Page 56125]]

create heightened accountability and have a deterrent effect on 
violations. Consumer advocate commenters stated that the public 
registry would promote compliance with orders. An industry commenter 
stated that the public registry would help entities conduct due 
diligence and choose their service providers, would motivate nonbanks 
to comply with the law, and would provide financial institutions with 
examples of the types of acts and practices that constitute violations 
of consumer financial protection laws.
    See part V above for a discussion of comments regarding publication 
received from other agencies during the Bureau's interagency 
consultation process.
    Comments received regarding alternatives to the proposal's approach 
to publication.
    Many commenters proposed alternatives to the proposal's approach to 
publication of registry information. An industry commenter stated that 
the Bureau could just provide links on a web page instead. An industry 
commenter stated that the additional benefit of publication to 
consumers was unclear in light of the existence of other, more user-
friendly registries. Another industry commenter stated that the Bureau 
should instead work with State and other Federal agencies to create a 
unified database. An industry commenter stated that the Bureau should 
use its other tools instead to provide transparency and public 
guidance, including the Bureau's Supervisory Highlights publication, 
advisory opinions, and other rulemakings such as larger participant 
rules. A consumer advocate commenter stated the Bureau should work with 
the Federal Deposit Insurance Corporation (FDIC) and other regulators 
to establish other similar registries in addition to establishing the 
proposed Bureau registry. An industry commenter stated that the 
publication of registry information might deter other regulators from 
maintaining their own sites containing information about covered 
orders.
    An industry commenter stated that publication of information about 
covered orders would lack context and be unfair and misleading because 
entities are precluded from similarly publicly disclosing outcomes of 
successful audits and examinations.
    An industry commenter stated that the Bureau should permit a 
covered nonbank to publish its own accompanying statement or 
explanation in connection with information published in the registry so 
that other financial institutions in the market and consumers can 
better understand the reason for the covered order.
    Comments received stating publication of registry information would 
further improper purposes.
    Commenters stated that the true purpose of publishing the registry 
was to name and shame the entities that were registered as well as 
their executives, to impose a ``scarlet letter'' on such persons, or to 
punish such entities, and not the purposes stated in the Bureau's 
proposal.
    Industry commenters also stated that the Bureau's true purpose in 
publishing registry information was to benefit plaintiffs' lawyers and 
class action lawsuits against industry participants. Industry 
commenters stated that the information published in the proposed 
registry would be used against the covered nonbank in other litigation, 
and that increased litigation and risk of litigation against covered 
nonbanks will hurt consumers by raising costs.
    Commenters stated that the references in the proposal and in 
related Bureau statements identifying the proposed registry as relating 
to ``repeat offenders'' indicated that the registry was being adopted 
for an improper purpose. Commenters stated that the Bureau should not 
call the proposed registry a ``repeat offender registry.'' Commenters 
also questioned what it might mean to be a ``repeat offender'' as the 
Bureau used that term, and what the consequences of such a designation 
might be. An industry commenter stated that such a designation would 
imply wrongdoing, even though the entity might not have admitted 
liability. An industry commenter stated that such a designation would 
mislead consumers by indicating that less significant violations listed 
on the registry were comparable to more serious ones. An industry 
commenter stated that the term ``repeat offenders'' was inflammatory, 
and expressed concern that the Bureau would impose ``repeat offender 
penalties'' based on non-CFPB orders. An industry commenter stated that 
the use of such language demonstrated a belief on the part of the 
Bureau that past violations are an indication of potential future 
violations. And an industry commenter stated that the proposal did not 
truly address ``repeat offenders'' but rather perhaps those businesses 
who are not able to afford defending themselves from government 
attacks.
    Comments received regarding the publication of the name and title 
of attesting executives.
    The Bureau specifically requested comment on whether the 
requirement to submit the name and title of the attesting executive 
``would assist users of the NBR system and whether it would unduly 
interfere with the privacy interests of the attesting executive or 
other interests of the supervised entity.'' \439\ A consumer advocate 
commenter stated that it would be appropriate to publish the name and 
title of the attesting executive, and that the Bureau would be able to 
make clear that the executive is not necessarily an at-fault 
individual. Other commenters objected to the proposal's provisions 
regarding the publication of the name and title of the attesting 
executive. Commenters stated that publishing the name and title of the 
attesting executive would impose reputational harm or would violate due 
process and the presumption of innocence by shaming the executive and 
the company. An industry commenter stated that the proposed requirement 
to designate a current executive as an attesting executive would 
unfairly implicate executives in previous wrongdoing, and that the rule 
should only require designation of an attesting executive where the 
executive had been serving at the time of the violations underlying the 
order. Some industry commenters expressed privacy concerns about this 
aspect of the Bureau's proposal. Most of the commenters generally 
expressed this concern without added explanation, but one industry 
commenter asserted that it was highly likely publishing this 
information would result in these individuals being subject to unfair 
and unjust harassment.
---------------------------------------------------------------------------

    \439\ 88 FR 6088 at 6102.
---------------------------------------------------------------------------

    Other comments received regarding publication.
    An individual commenter stated that the proposed publication of 
registry information would focus on larger companies, leading consumers 
to smaller but possibly more harmful entities. Other commenters 
asserted that smaller entities will be disproportionately affected. A 
joint comment from industry groups stated that the proposed registry 
would risk public trust in new and emerging companies. An industry 
commenter stated that the proposed registry would deter consumers from 
working with legitimate companies, including debt collection 
businesses.
    A consumer advocate commenter urged the Bureau to make the proposed 
public database searchable, sortable, and downloadable.
    Industry commenters and another commenter stated that the proposal 
was contrary to the public policy behind the Fair Debt Collection 
Practices Act

[[Page 56126]]

(FDCPA).\440\ A commenter stated that the proposal would publish the 
names of covered nonbanks in order to punish and harm them in a manner 
precluded by the FDCPA. An industry commenter stated that while the 
proposal might not directly conflict with the FDCPA, it could prompt 
additional interest in public information in court records and other 
materials that might embarrass consumers.
---------------------------------------------------------------------------

    \440\ 15 U.S.C. 1692 et seq. The FDCPA is an enumerated consumer 
law and a Federal consumer financial law, as provided at 12 U.S.C. 
5481(12)(H) and (14).
---------------------------------------------------------------------------

    Commenters disagreed with the Bureau's statements in the proposal 
that publication of registry information would benefit other regulators 
and agencies. An industry commenter stated that publication would be of 
small or no benefit to other agencies because the orders published 
under the proposal would already be public and because the relevant 
State regulators already have adequate information about covered 
orders.
    Commenters stated that publication of the proposed registry would 
confuse consumers and other public users, thus itself leading to risk 
and harm to consumers.
    Commenters stated that the proposal would present all orders as the 
same, which would be misleading. An industry commenter stated that one 
State's orders may not appropriately compare to other States, and 
expressed concern that companies with covered orders addressing other 
matters not related to consumer products, data, or market harm could 
still inadvertently be included with companies that have an actual 
track record of consumer harm. The commenter also asserted that orders 
with effective dates before 2019 were less relevant to the registry 
because covered nonbanks were more likely to have taken remedial steps 
in connection with the order, and expressed concern that the 
publication of such earlier orders together with orders issued later 
would unfairly characterize the earlier orders as having the same 
relevance as later ones. And the commenter stated that the registry 
should only require registration once a nonbank became subject to at 
least five non-expired covered orders.
Comments Received Regarding Proposed Sec.  1092.204(b)
    The Bureau specifically sought comment on the proposed approach 
with respect to treatment of the written statement,\441\ whether 
treatment of written statement submissions as Bureau confidential 
supervisory information was warranted, and whether the Bureau should 
consider taking other steps to facilitate the submission of written 
statements. An industry commenter expressed concern about proposed 
Sec.  1092.203(b) and the Bureau's treatment of the written statements 
submitted under proposed Sec.  1092.203, stating that the Bureau might 
change its mind about protecting written statements as confidential 
supervisory information.
---------------------------------------------------------------------------

    \441\ 88 FR 6088 at 6129.
---------------------------------------------------------------------------

Response to Comments Received
Response to Comments Received Regarding Proposed Sec.  1092.204(a)
    Response to general comments received regarding publication.
    For the reasons given in the description of the proposal above and 
further addressed below, the Bureau intends to publish a registry that 
contains the identifying information for covered nonbanks that the 
nonbank registry collects under Sec.  1092.202(c) and the information 
regarding covered orders collected under Sec.  1092.202(d), as well as 
certain information collected under Sec.  1092.203 for the purposes of 
enabling users of the registry to identify NMLS-published covered 
orders and the applicable covered nonbanks subject to them. Except as 
described further below, the Bureau concludes that publication of such 
information will be in the public interest. However, as described 
further below, the Bureau is modifying the proposal to provide that the 
Bureau may choose, in its sole discretion, not to publish such 
information based on operational considerations.
    The Bureau agrees with commenters that the nonbank registry's 
centralization and republication of covered orders that are already 
public may make them easier to locate and access, and thus somewhat 
increase their visibility. That is part of the point of publishing 
them. The Bureau believes that publication of registry information as 
described in Sec.  1092.205 will serve the purposes described in part 
IV.
    Response to comments received regarding alternatives to the 
proposal's approach to publication.
    The Bureau does not agree that the proposed alternative approaches 
to publication suggested by commenters would serve the purposes for 
which the Bureau is adopting the final rule. Among other things, these 
alternative approaches would be more resource intensive for Federal and 
State agencies, including the Bureau, and would make it more difficult 
to identify covered orders and the covered nonbanks that are subject to 
them.
    As discussed in part IV and the section-by-section discussion of 
Sec.  1092.203 above, the Bureau is finalizing a new Sec.  1092.203 
that provides, with respect to any NMLS-published covered order, a 
covered nonbank that is identified by name as a party subject to the 
order may elect to comply with the one-time registration option 
described in that section in lieu of complying with the requirements of 
Sec. Sec.  1092.202 and 1092.204. Also as discussed in part IV and the 
section-by-section discussion of Sec.  1092.203 above, the Bureau 
disagrees with commenters that the other sources of information 
identified by commenters diminish the need for the nonbank registry, or 
that the rule should accept registration of covered orders under those 
sources in lieu of registration with the nonbank registry. While the 
Bureau intends to continue using all of its available tools to promote 
transparency and provide guidance as appropriate, the Bureau concludes 
that it is also appropriate to adopt the final rule to accomplish the 
purposes described herein.
    With respect to the industry commenter's assertion that the 
publication of registry information might deter other regulators from 
maintaining their own sites containing information about covered 
orders, first, the Bureau believes establishing the registry 
accomplishes the goals established for it under the CFPA, and would do 
so even if the effect described by this commenter were to occur. The 
Bureau does not believe this consideration should outweigh the benefits 
resulting from the final rule. Second, it is not clear this described 
effect would occur, and whether it does or not depends upon many 
factors outside the Bureau's control. Other agencies must make their 
own decisions regarding how best to utilize their own resources to meet 
their own goals and priorities. As described at part V, the Bureau 
engaged in consultations with many Federal, State, and Tribal agencies 
with respect to both the proposal and the final rule, as required by 
the CFPA. No other agency, in those discussions or otherwise, has 
indicated to the Bureau that it was considering ceasing the publication 
of any of its own published orders in light of the final rule. Third, 
even if the Bureau were to consider this potential effect, the Bureau 
would expect it to be a very small one, since the Bureau expects 
agencies would generally continue to maintain their current approach to 
publishing their own orders. Many agencies are under an existing legal 
obligation to publish their

[[Page 56127]]

orders.\442\ For agencies that have discretion over whether to publish 
their orders enforcing the law, the Bureau does not anticipate that the 
Bureau's rule would cause many, if any, agencies to change their 
practices regarding publication. The orders defined as ``covered 
orders'' under the final rule represent only a portion of the orders 
issued or obtained by most, if not all, agencies other than the Bureau. 
For example, covered orders do not include orders against individuals, 
or that do not relate to covered laws. Likewise, other agencies may 
have jurisdiction over entities that do not qualify as covered nonbanks 
and thus are not subject to the final rule. The Bureau thus expects 
that few, if any, agencies would modify their general practices 
regarding publication to avoid a subset of their orders from appearing 
in the Bureau's public registry. Therefore, the Bureau does not expect 
the final rule to have much, if any, effect on the publication 
decisions made by other agencies.
---------------------------------------------------------------------------

    \442\ See, e.g., 12 U.S.C. 1818(u) (requiring appropriate 
Federal banking agencies to publish certain final orders and 
agreements); 5 U.S.C. 552(a)(2)(A) (``[E]ach agency, in accordance 
with published rules, shall make available for public inspection in 
an electronic format . . . final opinions, including concurring and 
dissenting opinions, as well as orders, made in the adjudication of 
cases'').
---------------------------------------------------------------------------

    As explained above, an industry commenter expressed concern that 
the Bureau's public registry would be unfair and misleading because it 
would not contain information regarding successful audits and 
examinations of registered entities. The Bureau disagrees. The 
existence of prior successful audits or examinations does not render 
the information that would be published in the registry inaccurate, 
inconsistent, or misleading.
    The consumer advocate commenter's suggestion to establish other 
similar registries in addition to establishing the proposed Bureau 
registry is outside the scope of the proposal, but the Bureau may 
consider related action at a later date.
    The Bureau declines to create a mechanism for a covered nonbank to 
publish its own accompanying statement or explanation on the nonbank 
registry in connection with information published in the registry. The 
Bureau believes requiring the nonbank registry to publish such 
statements would increase the complexity and costs associated with the 
nonbank registry and may confuse users. The Bureau declines to 
republish on its own registry statements provided by covered nonbanks 
regarding either the Bureau's own orders or orders issued or obtained 
by other agencies, especially as those statements may contain factual 
or legal errors. The Bureau also declines to utilize its resources to 
review and screen such statements for materials that may not be 
appropriate to publish, such as personally identifiable information 
about consumers. Such statements are not generally included with orders 
published by the Bureau or by other agencies. Subject to other 
applicable law, covered nonbanks would be free to issue their own 
statements about a covered order or the matters underlying it.
    Response to comments received stating publication of registry 
information would further improper purposes.
    The Bureau disagrees with the commenters stating publication of 
registry information would further improper purposes. The Bureau 
reiterates that its purposes in publishing registry information are 
described in part IV and in the description of the Bureau's proposal 
above, and include informing the public, other regulators, academic 
researchers, consumer advocacy organizations, and public education 
efforts regarding covered orders and the covered nonbanks that are 
subject to them. Any publication by the Bureau of the information 
collected through the registry is not intended to punish companies or 
individuals for their past acts. As discussed in part IV(F) above, 
consumers may benefit from the publication of the information collected 
by the registry, including information about orders that are already 
public. For example, the Bureau believes that, at least in certain 
cases, publishing information about the entity and its applicable 
orders in a public registry will help certain consumers make informed 
decisions regarding their choice of consumer financial products or 
services, especially if the information in the registry is 
recirculated, compiled, or analyzed by other users such as consumer 
advocacy organizations, researchers, or the media. And publication of 
covered orders in the registry may also facilitate private enforcement 
of the Federal consumer financial laws by consumers, to the extent 
those laws provide private rights of action, where consumers have been 
harmed by a registered nonbank. These purposes are consistent with the 
public interest, with the Bureau's other purposes in publishing 
registry information, and with the Bureau's statutory authorities. The 
Bureau disagrees that its purpose in publishing such information is to 
shame companies or executives that are listed in the registry.
    With respect to the industry comments regarding use of published 
orders in litigation, and potential additional costs that may be 
associated, the covered orders subject to publication under Sec.  
1092.205 are already public, which will limit the costs imposed on 
firms by the final rule's publication provisions. As discussed in part 
IV(F) above, the Bureau believes that users who have access to 
information published in the registry may potentially use that 
information to assist with the assertion of private rights of action 
that might be available under the Federal consumer financial laws. That 
is part of the reason the Bureau is issuing the final rule. The Bureau 
disagrees that litigation brought by other agencies or consumers to 
enforce rights under Federal consumer financial law, as applicable, is 
necessarily inappropriate. While the registry information published 
under the final rule may include plaintiffs' lawyers among its users, 
or help inform class action lawsuits against industry participants, it 
is not the purpose of the registry to encourage or promote lawsuits 
purely for the sake of litigation. Rather, the Bureau is finalizing 
Sec.  1092.205 for the purposes described in part IV and in the 
description of final Sec.  1092.205 below. For additional discussion 
about these and other potential costs associated with this provision, 
see part VIII.
    With respect to the comments regarding the statements in the 
proposal and other related Bureau statements about ``repeat 
offenders,'' one of the purposes of the rule is to help the Bureau 
identify persons that repeatedly violate the law. The information that 
the Bureau intends to publish under Sec.  1092.205 will help the Bureau 
and other users identify entities that have violated the law, including 
those that have become subject to more than one covered order. Such 
entities would be more difficult to identify without the existence of 
the registry because the information about these entities and orders is 
scattered across multiple sources, and may no longer be accurate or 
updated in a timely fashion. However, the proposal did not purport to 
comprehensively define the term ``repeat offender'' \443\ or to 
establish any specific legal consequences of any such designation, and 
the Bureau declines to

[[Page 56128]]

do so in the final rule. The Bureau will use the information supplied 
by the registry in accordance with relevant law, including to inform 
its supervisory and enforcement functions. For example, as stated in 
part IV(B) above, the information contained in the proposed registry 
may be relevant in assessing civil penalties for violations of Federal 
consumer financial laws, given that Congress has provided that such 
penalties should take into account an entity's ``history of previous 
violations'' and ``such other matters as justice may require.'' \444\ 
As stated in part IV(B) above, the Bureau may consider certain matters 
identified in previous enforcement actions published in the nonbank 
registry to be relevant under these provisions. But the final rule does 
not establish new requirements or guidelines for such determinations, 
which will be made in accordance with existing law.
---------------------------------------------------------------------------

    \443\ But see 88 FR 6088 at 6095 (``Recidivism--whether in the 
form of a company that repeatedly violates the law and as a result 
becomes subject to multiple orders, or in the form of a company that 
violates the orders to which it is subject--poses particular risks 
to consumers.'').
    \444\ See, e.g., 12 U.S.C. 5565(c)(3)(D), (E).
---------------------------------------------------------------------------

    Response to comments received regarding the publication of the name 
and title of attesting executives.
    The Bureau intends to publish the names and titles of attesting 
executives designated under Sec.  1092.204(b).\445\ Publishing this 
name and title information will provide information of use to 
consumers, other regulators, industry, nongovernment organizations, and 
the general public.
---------------------------------------------------------------------------

    \445\ As discussed further below, the Bureau is retaining the 
discretion not to publish this information based on operational 
considerations.
---------------------------------------------------------------------------

    As explained elsewhere in this preamble, collecting information 
regarding the name and title of the attesting executive for a given 
covered order will provide the Bureau with insight into the entity's 
organization, business conduct, and activities, and will inform the 
Bureau's supervisory work, including its risk-based prioritization 
process. As discussed in part IV(F) above, the Bureau believes this 
information will be similarly valuable to other users of the nonbank 
registry, and thus intends to publish it in connection with covered 
orders registered by supervised registered entities. Disclosure of this 
information would increase transparency regarding how the Bureau 
processes and verifies information submitted as part of the nonbank 
registry. Thus, publication would further the rationale of the 
proposal--that is, enhancing oversight and awareness of covered orders 
and the covered nonbanks that are subject to them. Publishing the name 
and title of attesting executives for the covered orders listed on the 
registry will bring specificity and concreteness to the information 
that is available to users of the nonbank registry allowing users to 
better understand the nature of particular covered orders, which 
activities of the applicable supervised registered entity they relate 
to, and who at the entity has control over the entity's efforts to 
comply with a particular covered order. Publishing name and title 
information for attesting executives could help consumers and consumer 
advocacy organizations better understand and monitor the conduct of the 
entities with whom consumers do business.
    While the Bureau will treat the contents of the written statements 
as CFPB confidential supervisory information (Sec.  1092.204(b)), 
publishing the name and title of each supervised registered entity's 
attesting executive(s) for each covered order will provide transparency 
to users of the registry and the general public regarding important 
matters connected with the applicable covered order. The entity will be 
identified as potentially subject to Bureau supervision under CFPA 
section 1024,\446\ the officers will be designated as satisfying the 
criteria established in Sec.  1092.204(b) with respect to each covered 
order, and registry users will be able to quickly and efficiently 
identify which officer is responsible for filing the annual written 
statement with respect to the covered order. Thus, the registry will 
provide users with an up-to-date and accessible source of information 
about supervised registered entities, the covered orders to which they 
are subject, and the senior officers who are responsible for filing 
annual written statements about those orders.
---------------------------------------------------------------------------

    \446\ 12 U.S.C. 5514. While, under Sec.  1092.102(c) of the 
final rule, an entity's compliance with Sec.  1092.204 would not 
prevent the entity from disputing that it is subject to Bureau 
supervision under 12 U.S.C. 5514, publication of the fact that an 
entity has designated an attesting executive under Sec.  1092.204 
would indicate to users of the nonbank registry that the entity may 
be subject to Bureau supervision.
---------------------------------------------------------------------------

    The Bureau does not intend, in publishing the name and title of the 
attesting executive, to convey the impression that the executive is 
solely responsible for compliance at the entity, or that problems with 
the entity's compliance with the covered order should be directed 
solely to the attention of the attesting executive, or that the 
executive was necessarily in any way responsible for the entity's 
violations of law or other actions or omissions that resulted in the 
imposition of the covered order. The Bureau also disagrees with 
commenters' assertions that the designation requirement will unfairly 
implicate the attesting executive in previous wrongdoing, and declines 
to adopt the industry commenter's suggestion that the rule should only 
require designation of an executive where the executive had been 
serving at the time of the violations underlying the order. As 
discussed in the section-by-section discussion of Sec.  1092.204(b), 
even for those covered orders that the Bureau is authorized to enforce, 
Sec.  1092.204(b)'s requirement to designate an attesting executive 
does not mean that the Bureau intends to hold that executive solely 
responsible for the entity's compliance with those covered orders. For 
example, Sec.  1092.204(b)'s requirements for the entity's designation 
of its attesting executive(s) do not imply that the attesting executive 
is, merely by dint of that individual's designation under the final 
rule, more responsible or accountable than is a supervised registered 
entity's board of directors for any of the entity's acts or omissions. 
The Bureau acknowledges that some nonbank registry users may be 
susceptible of misimpressions on these matters, and may misunderstand 
the Bureau's publication of the executive's name and title as a 
statement about the executive's culpability or responsibility. 
Nevertheless, the Bureau does not believe this misconception will be 
widespread, and believes the publication of the name and title of 
attesting executives will generally be in the public interest for the 
reasons discussed. As discussed in the section-by-section discussion of 
Sec.  1092.204(b) above, the final rule does not establish any new 
standards, or alter any existing standards, regarding individuals' 
liability for supervised registered entities' violations of covered 
orders or other legal obligations.
    Likewise, publishing the name and title of the attesting executive 
will not violate due process or the presumption of innocence. As 
discussed above, such publication as provided in Sec.  1092.205 is 
consistent with the public interest, with the Bureau's other purposes 
in publishing registry information, and with the Bureau's statutory 
authorities. The Bureau disagrees that publishing such information will 
shame executives that are listed in the registry. Publishing such 
information also does not impose criminal penalties on or otherwise 
punish such executives. Publication will inform potential users of the 
registry that the supervised registered entity has designated the 
individual named on the grounds that the individual satisfies the 
criteria established under Sec.  1092.204(b) with respect to the 
particular covered order.

[[Page 56129]]

Those criteria do not carry any connotation of shame or wrongdoing, and 
publication of such information is not a punishment or penalty.
    The Bureau believes that the publication of the name and title of 
the attesting executive associated with each covered order who 
satisfies the criteria of Sec.  1092.204(b) with respect to that order 
will be useful to users of the nonbank registry, and disagrees that it 
will only cause reputational harm. For example, such information will 
facilitate coordination and communication regarding the order between 
the Bureau, other government agencies, and the supervised registered 
entity. Other regulators, especially those that have issued covered 
orders regarding the supervised entity, would likely benefit from 
understanding which executive(s) have been tasked with ensuring 
compliance with their orders. Clients or other companies that do 
business with the entity would have a better understanding of which 
areas of the company are affected by a covered order and who is 
responsible for compliance with it. And researchers, media, and other 
users of the information may be able to detect trends or patterns 
associated with such information.
    Such additional regulatory and public scrutiny of the individuals 
who are so designated, and the awareness on the part of the executive 
and supervised registered entity that other parties may associate the 
executive's name with the entity's efforts to comply with the order, 
will promote identification and assessment of risks to consumers and 
compliance with the laws that the Bureau administers. In particular, 
with respect to covered orders enforced by the Bureau, publication as 
authorized under the final rule will help ensure accountability at the 
entity for noncompliance and provide an incentive to pay more attention 
to such covered orders.
    One industry commenter challenged the Bureau's assertion that the 
publication of name and title information would promote compliance, 
asserting that because this information is already public in some other 
form, it is difficult in the commenter's view to see how this 
requirement creates an enhanced incentive other than creating negative 
reputational costs. Since the requirement to designate an attesting 
executive specific to each covered order stems from the rule itself and 
is not a preexisting requirement, information about the name and title 
of any particular attesting executive associated under the rule with a 
particular covered order would not already be public information. The 
Bureau believes that many attesting executives will already be publicly 
identified as employees of these entities in some other way (e.g., on 
the company's website or in filings, licenses, or registrations 
required under applicable Federal or State securities or corporate 
law). However, such sources would not generally provide information 
regarding the entity's designation of attesting executives in the 
manner prescribed by the final rule. Also, not all public sources of 
information about the names and titles of executives may be as accurate 
or reliable, or as frequently updated, as the Bureau's registry. 
Publishing the name and title information in the nonbank registry 
itself will enhance users' ability to identify accurate and up-to-date 
information about such matters quickly, and to associate it with the 
correct covered order and supervised registered entity. By enabling 
enhanced monitoring of such matters, publication of the name and title 
information will promote compliance and the identification and 
assessment of risks to consumers.
    One industry commenter asserted that publishing an attesting 
executive's name and title would disrupt supervised registered 
entities' normal complaint-handling procedures by creating a false 
perception that reaching out to a particular executive would be more 
effective. The Bureau agrees with the commenter that consumers 
generally should not rely on the name and title of the attesting 
executive as a tool for identifying where to direct their complaints or 
inquiries. Section 1092.203(b) does not identify an executive's role in 
the entity's complaint-handling process as one of the criteria for 
designating an attesting executive, and consumers should not rely on 
this designation for such a purpose. The Bureau acknowledges that the 
notice of proposed rulemaking stated that publishing the attesting 
executive's name and title would ``inform consumers of a person to whom 
they could direct escalated complaints.'' \447\ However, in this final 
rule, the Bureau is not adopting this rationale for publishing the name 
and title of the attesting executive. The Bureau agrees with the 
commenter that a supervised registered entity's normal complaint-
handling procedures may not always involve the designated executive in 
the entity's complaint-handling process, and that consumers' escalating 
of complaints or inquires to officers whom the entity has not 
designated as responsible for fielding complaints or inquiries directly 
from the public may not always be effective or appropriate. Nor should 
consumers or other users of the nonbank registry utilize this 
information for the purposes of harassment, badgering, or intimidation 
of the entity's officers.
---------------------------------------------------------------------------

    \447\ 88 FR 6088 at 6102.
---------------------------------------------------------------------------

    However, as described in the proposal,\448\ it is possible that at 
least under certain scenarios, consumers who are affected by a 
supervised registered entity's compliance (or failure to comply) with a 
covered order may benefit from knowing the name and title of the 
executive who has knowledge and control of the supervised entity's 
efforts to comply with the covered order. Publishing this information 
will enable consumers to better understand the operations and structure 
of the supervised registered entity--for example, which of the entity's 
lines of business or business names has responsibility for the matters 
addressed by the order, how their complaints or inquiries regarding 
matters relating to the order may be addressed, and how the entity's 
compliance efforts with respect to any one covered order may relate to 
its efforts with respect to other such orders.
---------------------------------------------------------------------------

    \448\ Id.
---------------------------------------------------------------------------

    Likewise, as stated in the proposal,\449\ publication of executive 
name and title information will enable employee whistleblowers, or 
other consumers who have knowledge and information about violations of 
the applicable order, to ensure that such information gets to the 
appropriate department or office within the supervised registered 
entity. Again, the Bureau agrees with commenters that whistleblowers 
and consumers generally should not rely on the name and title of the 
attesting executive as a tool for identifying the individual to whom to 
direct this information. The final rule is not intended to require 
supervised registered entities to establish different processes for 
such matters or to require attesting executives to become responsible 
for all whistleblower complaints. Nevertheless, publishing this 
information will help whistleblowers and consumers better understand 
the operations and structure of the supervised registered entity, 
including where--using any applicable processes established by the 
entity for obtaining information about such matters--to direct 
whistleblowing complaints or information about violations of the 
covered order in order to ensure that their complaint or information is 
being sent to the appropriate part of the organization.
---------------------------------------------------------------------------

    \449\ Id.

---------------------------------------------------------------------------

[[Page 56130]]

    One commenter asserted that publication of the name and title of 
attesting executives would not ensure that supervised registered 
entities are legitimate entities and are able to perform their 
obligations to consumers under CFPA section 1024(b)(7)(C). First, to 
the extent this comment is intended to assert that Sec.  1092.204(b)'s 
designation requirement is unlawful, the Bureau disagrees; see parts 
III and IV and the section-by-section discussion of Sec.  1092.204(b). 
Second, this concern is not relevant to the Bureau's legal authority to 
publish this information. While the Bureau is promulgating the written-
statement requirements, including the requirement to designate 
attesting executive(s) and submit written statements, under its 
authority under CFPA section 1024(b)(7)(A)-(C), the Bureau is also 
collecting attesting executives' names and titles under its market-
monitoring authorities in CFPA section 1022(c),\450\ and it intends to 
publish such information under its authority at CFPA section 
1022(c)(3), not under CFPA section 1024(b)(7)(A)-(C).\451\ 
Nevertheless, the Bureau believes that publication of the name and 
title information will in fact independently help ensure that 
supervised registered entities are legitimate entities and are able to 
perform their obligations to consumers. Publishing this information 
will promote accountability and compliance at the supervised registered 
entity, helping to ensure that the supervised registered entity takes 
its legal duties seriously, and that it is not treating the risk of 
enforcement actions for violations of legal obligations as a mere cost 
of doing business. While the commenter questioned why an illegitimate 
entity would register at all, the Bureau believes that not all entities 
that register in compliance with the final rule will necessarily be 
perfectly willing and able to comply with their other legal obligations 
to consumers, including those imposed by Federal consumer financial 
law. Collecting and publishing name and title information for attesting 
executives will help ensure these entities are legitimate.
---------------------------------------------------------------------------

    \450\ See id. at 6119.
    \451\ As discussed in the proposed rule, see 88 FR 6088 at 6128, 
the Bureau recognizes that the attesting executives' names and 
titles could be construed as ``confidential supervisory 
information'' as defined in the Bureau's confidentiality rules at 12 
CFR 1070.2(i) because the Bureau is relying in part on its 
supervisory authority in 12 U.S.C. 5514 to collect the information. 
In the proposal, the Bureau explained that public release of 
information pursuant to proposed Sec.  1092.204(a) would have been 
authorized by the Bureau's confidentiality rules at 12 CFR 
1070.45(a)(7), which permits the Bureau to disclose confidential 
information ``[a]s required under any other applicable law.'' The 
Bureau recognizes that 12 CFR 1070.45(a)(7) is no longer applicable 
because publication under the final rule is discretionary. As such, 
if the Bureau publishes the above-described information, it would do 
so pursuant to an authorization from the Director in accordance with 
12 CFR 1070.46.
---------------------------------------------------------------------------

    With respect to commenters' privacy concerns, the only information 
collected under Sec.  1092.204 related to the written statement that 
would be published under Sec.  1092.205 is the attesting executive's 
name and title. The Bureau would not publish any contact information 
required to be submitted through the registry, which the Bureau intends 
to obtain as ``administrative information'' pursuant to filing 
instructions issued under Sec.  1092.102(a). It is not clear how 
publication of this limited name and title information would result in 
any harassment of the attesting executives. Moreover, under the Freedom 
of Information Act,\452\ an individual's expectation of privacy is 
diminished concerning matters where the individual is acting in a 
business capacity.\453\ Finally, the rule requires that the attesting 
executive be a high-ranking senior executive officer at the entity. As 
such, the Bureau believes that many attesting executives will already 
be publicly identified as employees of these entities in some other way 
(e.g., on the company's website or in filings, licenses, or 
registrations required under applicable Federal or State securities or 
corporate law). The Bureau does not believe publishing the name and 
title of the attesting executives implicates any more than a de minimis 
privacy interest.
---------------------------------------------------------------------------

    \452\ 5 U.S.C. 552.
    \453\ See, e.g., Brown v. Perez, 835 F.3d 1223, 1234-37 (10th 
Cir. 2016); King & Spalding, LLP v. U.S. Dep't of Health & Human 
Servs., 395 F. Supp. 3d 116, 119-23 (D.D.C. 2019).
---------------------------------------------------------------------------

    Response to other comments received regarding publication.
    Commenters did not provide any data supporting their claims about 
the likely size of covered nonbanks that would be subject to covered 
orders. Likewise, the industry commenter provided no evidence that new 
and emerging covered nonbanks are more likely to be subject to covered 
orders, or that the proposed registry would impose an unfair burden on 
them. While the Bureau does not expect the final rule to impose unfair 
or disproportionate effects on either small or large covered nonbanks, 
or based upon their new or emerging status, in any case the rule's 
requirements do not depend upon such matters. The Bureau intends to use 
the information it obtains through the rule to better understand the 
size and other characteristics of entities that are subject to covered 
orders. This information will be highly relevant and useful not just to 
the Bureau but to all government regulators of covered nonbanks as well 
as the other potential users of the registry discussed above. With 
respect to potential costs associated with this provision on smaller 
entities, see parts VIII and IX.
    As part of the purpose of the Bureau's publication of registry 
information under Sec.  1092.205 is to make the information available 
and easily usable for a range of potential users, including the general 
public, the Bureau intends to develop a nonbank registry with the goal 
of making registry information searchable, sortable, and downloadable, 
among other things.
    The Bureau believes the registry is authorized by the CFPA and does 
not conflict with other laws, including the FDCPA or its implementing 
Regulation F.\454\ The Bureau disagrees with commenters' suggestion 
that the Bureau's publication of information about covered orders and 
covered nonbanks as described in Sec.  1092.205 is likely to lead to 
the disclosure of embarrassing information about consumers. As stated 
in part III(B), the Bureau's registry is designed to not collect any 
protected proprietary, personal, or confidential consumer information, 
and thus, the Bureau will not publish, or require public reporting of, 
any such information under Sec.  1092.205.
---------------------------------------------------------------------------

    \454\ See 12 CFR part 1006.
---------------------------------------------------------------------------

    Notwithstanding commenters' assertions, the Bureau believes that 
collection and publication of information will benefit other agencies, 
for the reasons provided in the description of the proposed rule above. 
The Bureau's publication of identifying information, which may not have 
been previously made public, will enable other agencies, as well as 
consumers and other users, to more readily identify companies that are 
subject to covered orders and otherwise obtain relevant information 
about them, such as their legal name and principal place of business. 
While certain identifying information about covered nonbanks, 
especially those that are subject to other disclosure obligations under 
Federal and State securities laws or other laws, may already be 
available, information about many covered nonbanks may not be publicly 
available. Nor will all covered nonbanks necessarily be subject to 
licensing regimes or, even if they are so subject, be duly licensed and 
registered in every jurisdiction where it is required. Publication by 
the Bureau of identifying information under Sec.  1092.205 also will 
present such information in a consistent and readable

[[Page 56131]]

format and will otherwise assist other agencies as well as other 
registry users in locating and using this information. In addition, 
Bureau publication of information regarding covered orders as described 
under Sec.  1092.205 will collect and organize that information and 
make it easier to find and use. By requiring covered nonbanks to 
provide and maintain information about the orders under Sec.  
1092.202(d), the final rule will help ensure that other agencies and 
other users have ready access to collected and updated information 
about covered orders that may be relevant to their jurisdiction. As 
described in part V above, during interagency consultation some 
agencies stated they would use the information published in the 
registry, while others stated they would not.
    See the section-by-section discussion of Sec.  1092.203 above with 
respect to comments received regarding potential consumer confusion 
that commenters stated could be caused by the publication of 
information in the proposed registry in connection with the NMLS 
Consumer Access website, and the Bureau's adoption of optional one-time 
registration of NMLS-published covered orders under that section. As to 
other types of consumer confusion addressed by commenters, in the 
proposal,\455\ the Bureau acknowledged there may be some uncertainty 
over the degree to which consumers would use the publicized information 
and, when they do, over how consumers could interpret such information. 
The Bureau stated that it would continue to evaluate the possibility 
that publishing information collected under subpart B has the potential 
to create confusion, which, to the extent it occurs, is unlikely to 
serve the public interest. And the Bureau stated that, if it finalized 
the proposed provision on publishing registry information, it would 
consider options for publishing the information in a manner that 
mitigates this risk. No commenter submitted specific suggestions.
---------------------------------------------------------------------------

    \455\ 88 FR 6088 at 6128.
---------------------------------------------------------------------------

    To be clear, registration of any covered person under the final 
rule does not constitute endorsement by the Bureau or any other agency 
of the Federal Government. Registered entities may also be subject to 
orders that are not published in the registry.
    The Bureau does not believe, and does not intend by finalizing the 
rule or publishing information under Sec.  1092.205 to suggest, that 
all covered orders are somehow equivalent. To the contrary, the Bureau 
understands that covered orders are likely to vary widely in many ways, 
including in the types of covered nonbanks they are issued against, the 
types of covered laws they enforce, the type and magnitude of the harm 
to consumers they address, the types of remedies they impose, their 
duration, and any number of other matters. One of the reasons the 
Bureau is adopting the final rule is so that it may collect and review 
covered orders, including from covered nonbanks that it may not know 
about, in order to better understand such issues. As discussed in the 
section-by-section discussion of Sec.  1092.201(e), the Bureau does not 
believe these differences among covered orders require modification of 
the proposal. An order that satisfies the definition of the term 
``covered order'' is subject to the rule's requirements with respect to 
such orders, to the extent they apply.
    Nor does the Bureau believe that any differences among covered 
orders would render publication of such orders or the other 
registration information required by the rule to be misleading or 
inappropriate. To the contrary, publication of the information 
collected through the registry will better enable users to review and 
understand such covered orders directly for themselves, and thus to 
better appreciate any differences among them that may exist. Thus, 
publication of registry information as intended by the Bureau will 
accord with the Bureau's objectives and functions under the CFPA of, 
among other things, ensuring that ``markets for consumer financial 
products and services are fair, transparent, and competitive,'' \456\ 
and ``publishing information relevant to the functioning of markets for 
consumer financial products and services'' to facilitate 
``identify[ing] risks to consumers and the proper functioning of such 
markets.'' \457\ Publication of the copies of covered orders obtained 
under Sec.  1092.202(d)(1) will provide users with the opportunity to 
review the differences among covered orders.
---------------------------------------------------------------------------

    \456\ See 12 U.S.C. 5511(a).
    \457\ See 12 U.S.C. 5511(c)(3).
---------------------------------------------------------------------------

    The Bureau's potential publication of information relating to 
consent orders as described at Sec.  1092.205 will not provide 
inaccurate, inconsistent, or misleading information to consumers, as 
the Bureau will simply be collecting and presenting factual information 
regarding orders that are already published (or required to be 
published) elsewhere. As discussed in parts VIII and IX below, the 
Bureau concludes that the publication provisions of the rule will 
impose only minor costs on affected entities resulting from changes in 
consumer behavior. Publication of information as intended by the Bureau 
will enable users of the registry to access relevant factual 
information about covered nonbanks and covered orders and will not 
cause, but rather help prevent, confusion and the distribution of 
misleading information.
    With respect to the commenter's objection to the publication of 
older orders, as discussed in the section-by-section discussion of 
Sec.  1092.201(e) above, the Bureau acknowledges that in the 
intervening time following the issuance of a covered order and before 
registration, it is possible that many entities will have taken steps 
to address the violations and other issues identified in the covered 
order. But information regarding the issuance of such a covered order, 
and the information that will be collected under the final rule about 
the covered nonbank and the order, will still be useful to users of the 
registry. With respect to the comment that the Bureau should only 
require registration once a covered order has become subject to a 
minimum of five covered orders, the Bureau concludes that such an 
approach would omit useful information about both covered nonbanks and 
covered orders and would otherwise not further the purposes of the 
final rule. The Bureau also concludes that such an approach is not 
necessary in order to limit confusion for users of the registry. As 
discussed above, while the Bureau may publish information about covered 
nonbanks and covered orders as authorized under Sec.  1092.205 in part 
to facilitate identification of entities that repeatedly break the law, 
the Bureau in this final rule does not purport to comprehensively 
define the term ``repeat offender'' or to establish any specific legal 
consequences of any such designation.
    For further discussion of these and other comments regarding 
potential confusion related to the publication of information about 
covered orders, see the section-by-section discussion of Sec.  
1092.201(e) above.
    The Bureau concludes that publication of the information collected 
under the registry with respect to such covered orders as described in 
Sec.  1092.205 will serve the purposes described herein.
Response to Comments Received Regarding Proposed Sec.  1092.204(b)
    For the reasons given in the description of proposed Sec.  
1092.204(b) above, the Bureau concludes that treating the written 
statements that it receives under Sec.  1092.204 of the final

[[Page 56132]]

rule as CFPB confidential supervisory information, and not publishing 
them under Sec.  1092.205 of the final rule, would facilitate the 
Bureau's supervision of supervised registered entities by enabling the 
Bureau to obtain frank and candid assessments and other information 
from supervised registered entities regarding violations and 
noncompliance in connection with covered orders. This information in 
turn would better enable the Bureau to spot emerging risks, focus its 
supervisory efforts, and address underlying issues regarding 
noncompliance, compliance systems and processes, and risks to 
consumers. The final rule adopts the proposal's approach and identifies 
the written statement as CFPB confidential supervisory information 
under Sec.  1092.204(a)(1). The Bureau believes its existing 
regulations under part 1070 are adequate to establish safeguards for 
protecting the confidentiality of such information.
Final Rule
    For the reasons described in parts III(B), IV(F), the section-by-
section discussion of Sec.  1092.205(a) above, and as follows, the 
Bureau is not finalizing Sec.  1092.204(a) as proposed, but is instead 
adopting a revised Sec.  1092.205(a) that provides that the Bureau 
``may'' publish the information submitted to the nonbank registry 
pursuant to Sec. Sec.  1092.202 and 1092.203.\458\ As described below, 
this provision will preserve the Bureau's discretion not to publish 
information based on operational considerations, such as resource 
constraints. The Bureau is also adopting proposed Sec.  1092.204(b), 
which would have provided that the Bureau would not publish the annual 
written statement and would treat it as Bureau confidential supervisory 
information, largely as proposed but with revisions to reflect the 
renumbering of this provision as Sec.  1092.205(a)(1) of the final 
rule. The Bureau is also adopting a provision at Sec.  1092.205(a)(2) 
that expressly provides that the Bureau will not publish administrative 
information collected pursuant to subpart B.
---------------------------------------------------------------------------

    \458\ See the section-by-section discussion of Sec.  1092.101(d) 
above regarding the Bureau's adoption of the revised term ``nonbank 
registry.''
---------------------------------------------------------------------------

    Except as described below, the Bureau intends to publish a registry 
that contains the identifying information for covered nonbanks that the 
nonbank registry collects under Sec.  1092.202(c) and the information 
regarding covered orders collected under Sec.  1092.202(d) and (f), as 
well as certain information collected under Sec.  1092.203 for the 
purposes of enabling users of the registry to identify NMLS-published 
covered orders and the applicable covered nonbanks subject to them. 
Under CFPA section 1022(c)(3), the Bureau ``shall publish not fewer 
than 1 report of significant findings of its monitoring required by 
this subsection in each calendar year,'' and ``may make public such 
information obtained by the Bureau under this section as is in the 
public interest.'' \459\ Except as described below, the Bureau finds 
that it would be in the public interest to publish information (other 
than ``administrative information,'' which the final rule provides the 
Bureau will not publish) that has been appropriately submitted to the 
nonbank registry as required under Sec.  1092.202. In addition, except 
as described below, the Bureau finds that the publication of certain 
information submitted under Sec.  1092.203 will be in the public 
interest where publication would serve the purposes of allowing users 
of the Bureau's public registry to identify that a covered nonbank has 
become subject to a covered order and to be able to locate information 
about that covered nonbank and covered order on the NMLS Consumer 
Access website. The Bureau may also collect additional information 
under Sec.  1092.203 for the purpose of coordinating the nonbank 
registry with the NMLS that it may choose not to publish. The Bureau 
concludes that such publication of the above-described information will 
be in the public interest for the reasons provided in parts III(B) and 
IV(F) and this section-by-section discussion of Sec.  1092.205(a).
---------------------------------------------------------------------------

    \459\ 12 U.S.C. 5512(c)(3).
---------------------------------------------------------------------------

    However, and notwithstanding the conclusions in the paragraph 
above, the Bureau reserves discretion not to publish information based 
on operational considerations, including resource constraints.
    In light of the adopted provision providing the Bureau with 
discretion not to publish any or all of the information collected, the 
Bureau is not finalizing the provision in the proposed rule that would 
have expressly reserved the right not to publish any information that 
it determines may be inaccurate, not required to be submitted under 
subpart B, or otherwise not consistent with part 1092 and any 
accompanying guidance. However, under the final rule, the Bureau 
retains the discretion not to publish any information that it 
determines may be inaccurate, not required to be submitted under 
subpart B, or otherwise not consistent with part 1092 and any 
accompanying guidance.
    The final rule provides that the publication described in Sec.  
1092.205(a) will not include the annual written statement submitted by 
supervised registered entities under Sec.  1092.204. The Bureau adopts 
Sec.  1092.204(b) as proposed (renumbered as Sec.  1092.205(a)(1)) for 
the reasons described above, with minor revisions to reflect the 
renumbering of Sec.  1092.204 and this provision.
    The Bureau is also adopting a provision at Sec.  1092.205(a)(2) 
that expressly provides that the publication described in Sec.  
1092.205(a) will not include ``administrative information,'' as that 
term is defined at Sec.  1092.201(a). The proposed rule had reserved 
the Bureau's right not to publish administrative information, but did 
not expressly prohibit its publication under proposed Sec.  
1092.204(a). However, the Bureau concludes that administrative 
information should not be made publicly available under Sec.  
1092.205(a). The identifying information collected under Sec.  
1092.202(c) already will facilitate the ability of consumers to 
identify covered persons for purposes of the Bureau's authority in CFPA 
section 1022(c)(7)(B) to publicly disclose registration information. 
Further, including administrative information with other information 
the Bureau publishes pursuant to Sec.  1092.205(a) is unlikely to serve 
the public interest for purposes of the Bureau's authority to publish 
information under CFPA section 1022(c)(3). The publication of 
information collected for a purely administrative purpose generally 
will not be useful to external users of the registry. Administrative 
information is likely to include information such as time and date 
stamps, contact information, and administrative questions. The Bureau 
may need such information to work with personnel at nonbanks and in 
order to administer the nonbank registry. As discussed in the section-
by-section discussion of Sec.  1092.201(a) above, the Bureau will also 
treat as administrative information the notifications of 
nonregistration submitted under Sec. Sec.  1092.202(g) and 1092.204(f). 
Publishing such information would not be in the public interest because 
it is unclear what use the public would have for such information. In 
addition, publishing such information likely would be counterproductive 
to the goals of ensuring compliance with the proposal.
    Also, as discussed in the section-by-section discussion of Sec.  
1092.202(d) above, under the final rule, the Bureau will treat as 
``administrative information'' and not publish information collected 
under the nonbank registry regarding the names of the person's 
affiliates registered under

[[Page 56133]]

subpart B with respect to the same covered order. The proposal would 
have collected this information under proposed Sec.  1092.202(d)(1)(v) 
and published it under Sec.  1092.204(a). Under the final rule, Sec.  
1092.201(d)(1)(v) has been deleted, but the Bureau may determine to 
collect this information as ``administrative information'' under Sec.  
1092.202(c). In filing instructions issued under Sec.  1092.102(a), the 
Bureau will specify whether and how it will collect such information. 
The Bureau anticipates that collecting such affiliate information may 
be useful in administering the nonbank registry including in connection 
with administering any joint or combined submissions by affiliates 
under Sec.  1092.202. However, while such affiliate information will 
generally be obvious from the face of the relevant covered order or 
otherwise from information that has been reported publicly, it may not 
always be, and the Bureau at this time does not believe that there 
would be a significant public benefit associated with publishing this 
information through its registry. Therefore, the Bureau has determined 
not to mandate the collection of such information in the final rule, 
and not to publish such information under Sec.  1092.205 if it is 
collected.
Section 1092.205(b) Other Publications of Information
Proposed Rule
    Proposed Sec.  1092.204(c) would have provided that the Bureau may, 
at its discretion, compile and aggregate data submitted by persons 
under proposed subpart B and may publish such compilations or 
aggregations (in addition to any other publication under proposed Sec.  
1092.204(a)). The Bureau explained that any such publication that 
relates to annual written statements submitted under proposed Sec.  
1092.203 would be in a form that is consistent with the Bureau's 
treatment of those annual written statements as Bureau confidential 
supervisory information.\460\
---------------------------------------------------------------------------

    \460\ See, e.g., 12 CFR 1070.41(c).
---------------------------------------------------------------------------

Comments Received
    Commenters did not specifically address proposed Sec.  1092.204(c).
Final Rule
    For the reasons set forth in the above description of the proposal, 
the Bureau adopts Sec.  1092.204(c) as proposed (renumbered as Sec.  
1092.205(b)), with minor technical edits. Any publication under Sec.  
1092.205(b) that relates to administrative information submitted to the 
nonbank registry under Sec.  1092.202 will be in an aggregated or other 
appropriate format that is designed not to disclose that particular 
administrative information relates to a particular covered nonbank.
Section 1092.205(c) Correction of Submissions to the Nonbank Registry
Proposed Rule
    Proposed Sec.  1092.204(d) would have clarified that a covered 
nonbank must correct an information submission within 30 days of when 
it becomes aware or has reason to know the submitted information was 
and remains inaccurate. Proposed Sec.  1092.204(d) would have clarified 
that the process for making corrections will be described in the filing 
instructions the Bureau issues pursuant to proposed Sec.  1092.102(a). 
Proposed Sec.  1092.204(d) also would have clarified that the Bureau 
may direct a covered nonbank to correct errors or other non-compliant 
submissions to the NBR system. Under proposed Sec.  1092.204(d), the 
Bureau could have directed corrections at any time and in its sole 
discretion.
Comments Received
    Commenters did not specifically address proposed Sec.  1092.204(d).
Final Rule
    For the reasons set forth in the above description of the proposal, 
the Bureau adopts Sec.  1092.204(d) as proposed (renumbered as Sec.  
1092.205(c)), with minor technical changes.\461\
---------------------------------------------------------------------------

    \461\ See the section-by-section discussion of Sec.  1092.101(d) 
above regarding the Bureau's adoption of the revised term ``nonbank 
registry.''
---------------------------------------------------------------------------

Section 1092.206 Nonbank Registry Implementation Dates

Proposed Rule
    Proposed Sec.  1092.101(e) would have defined the term ``nonbank 
registration system implementation date'' to mean, for a given 
requirement or subpart of part 1092, the date(s) determined by the 
Bureau to commence the operations of the NBR system in connection with 
that requirement or subpart. As stated in the proposal, the Bureau 
proposed to provide advance public notice regarding the nonbank 
registration system implementation date with respect to proposed 
subpart B to enable entities subject to subpart B to prepare and submit 
timely filings to the NBR system.
Comments Received
    Commenters did not specifically address the definition of ``nonbank 
registration system implementation date'' in proposed Sec.  
1092.101(e). For a discussion of comments addressing the timing of the 
effective date of the Bureau's proposed rule, see part VII below.
Final Rule
    For the reasons discussed below and in the section-by-section 
discussion of Sec.  1092.101(e) above and part VII below, the Bureau is 
adopting the revised term ``nonbank registry implementation date'' 
instead of the term ``nonbank registration system implementation date'' 
used in the proposed rule and is adopting a revised definition of this 
term to provide that the Bureau may specify a nonbank registry 
implementation date with respect to a given person or category of 
persons. The Bureau is also adopting Sec.  1092.206 to specify the 
nonbank registry implementation date for given categories of covered 
nonbanks. The Bureau is not adopting the proposal to provide in the 
rule that the Bureau would specify the ``nonbank registration system 
implementation date'' for subpart B following the issuance of the final 
rule. Instead, to provide greater certainty and clarity to covered 
nonbanks as of the issuance of the final rule, the Bureau is specifying 
nonbank registry implementation dates for subpart B in Sec.  1092.206 
of the final rule.
    The nonbank registry implementation date established under Sec.  
1092.206 is relevant to two provisions of the final rule. As provided 
in Sec.  1092.202(b)(2)(i), each covered nonbank required to register 
under Sec.  1092.202 must submit a filing containing the information 
described in Sec.  1092.202(c) and (d) to the nonbank registry within 
the later of 90 days after the applicable nonbank registry 
implementation date under Sec.  1092.206 or 90 days after the effective 
date of any applicable covered order. And as provided in Sec.  
1092.204(a)(1), Sec.  1092.204 applies only with respect to covered 
orders with an effective date on or after the applicable nonbank 
registry implementation date. Thus, this provision will affect the 
timeframe for submission of covered orders during the initial rollout 
of the nonbank registry and the covered orders that will be subject to 
Sec.  1092.204's written-statement requirements.
    Section 1092.206 establishes the nonbank registry implementation 
date for purposes of subpart B as follows. Under Sec.  1092.206(a)(1), 
for a covered nonbank that (as of the effective date of subpart B) is a 
larger participant of a market for consumer financial products or 
services described under CFPA section 1024(a)(1)(B) as defined by one 
or more rules issued by the Bureau, the nonbank registry implementation 
date for subpart B is 30 days after subpart B

[[Page 56134]]

takes effect with respect to that covered nonbank. Under Sec.  
1092.206(a)(2), for a covered nonbank that (as of the effective date of 
subpart B) is described under any other provision of CFPA section 
1024(a)(1), the nonbank registry implementation date for subpart B is 
120 days after subpart B takes effect with respect to that covered 
nonbank. Under Sec.  1092.206(a)(3), for any other covered nonbank, the 
nonbank registry implementation date for subpart B is 210 days after 
subpart B takes effect with respect to that covered nonbank. (Section 
1092.206(a)(3) shall apply to a covered nonbank that for the first time 
becomes subject to the Bureau's supervision and examination authority 
under CFPA section 1024(a)(1) after the effective date of subpart B.)
    For the administrability of the nonbank registry, which has 
numerous potential registrants, the Bureau has determined that 
registering different categories of nonbank covered persons in 
different phases will be appropriate. The phased implementation 
approach will also alleviate potential confusion in complying with the 
requirements of the final rule and promote greater stability and 
certainty for registered entities. This phased implementation approach 
will better enable the Bureau to learn from the information collected 
and its experience in maintaining the registry, and to enhance its 
processes before information from a wider universe of covered nonbanks 
is collected. As described above, the first phase under subpart B will 
register larger participants, the second phase will register other 
supervised nonbanks, and the third phase will register other covered 
nonbanks. Larger participants generally have greater resources to 
comply with the rule's requirements than do smaller business concerns. 
Other supervised markets may include smaller business concerns that are 
affected by the rule to the extent they are not excluded, such as by 
the exclusion for entities with less than $5 million in relevant 
receipts described in Sec.  1092.201(q) discussed in the section-by-
section discussion of that paragraph above. As a result, the phased 
registration groupings described above (registering larger participants 
first, then other covered nonbanks supervised under any other provision 
of CFPA section 1024(a)(1), then other covered nonbanks) would leave 
more time for most supervised registrants that are not larger 
enterprises to comply with the registration requirements. In addition, 
the Bureau believes it is appropriate to begin collecting information 
from covered nonbanks that are subject to the Bureau's supervision and 
examination authority first before extending the rule's registration 
requirements to other covered nonbanks, as such information will 
generally be more relevant to the Bureau's supervisory prioritization 
efforts and its supervision program.
    The Bureau is also adopting Sec.  1092.206(b), which clarifies that 
if paragraph (a) would establish a nonbank registry implementation date 
on a date that is a Saturday, Sunday, or Federal holiday, the 
applicable nonbank registry implementation date will be the next day 
that is not a Saturday, Sunday, or Federal holiday. Therefore, given an 
effective date for the final rule of September 16, 2024, for purposes 
of subpart B the nonbank registry implementation date established under 
Sec.  1092.206(a)(1) will be Wednesday, October 16, 2024; under Sec.  
1092.206(a)(2), the date will be Tuesday, January 14, 2025; and under 
Sec.  1092.206(a)(3), the date will be Monday, April 14, 2025.

VII. Effective Date of Final Rule

Proposed Rule

    The Administrative Procedure Act generally requires that rules be 
published not less than 30 days before their effective dates.\462\ The 
Bureau proposed that, once issued, the final rule would be effective 30 
days after it is published in the Federal Register. However, it 
proposed that registrants would only need to submit information once 
the Bureau launched and announced a registration system, which the 
proposal noted was likely to be no earlier than January 2024.
---------------------------------------------------------------------------

    \462\ 5 U.S.C. 553(d).
---------------------------------------------------------------------------

Comments Received

    An industry commenter stated that the effective date of the rule 
should be at least a year from the date it is promulgated, in order to 
provide adequate time to establish the suggested processes, procedures, 
and reports in addition to adding additional staff to support the 
process that would be required under the proposal.

Response to Comments Received

    The final rule will take effect on September 16, 2024. The Bureau 
disagrees with the commenter that additional time will be needed for 
entities to comply with the final rule. The final rule's effective date 
is more than three months from the issuance of the rule, and more than 
60 days after anticipated publication in the Federal Register. This is 
a longer time period than the 30 days in the proposed rule. This longer 
period will provide additional time for covered nonbanks to prepare to 
comply with their obligations under the final rule. In addition, as 
discussed in the section-by-section analysis of Sec.  1092.206 above, 
for the administrability of the nonbank registry the Bureau has 
determined that registering different nonbank covered persons in 
different phases will be appropriate. This phased implementation 
approach will better enable the Bureau to learn from the information 
collected and its experience in maintaining the registry, and to 
enhance its processes before information from a wider universe of 
covered nonbanks is collected. The Bureau is also specifying nonbank 
registry implementation dates for subpart B in Sec.  1092.206 of the 
final rule to provide greater certainty and clarity to covered nonbanks 
as of the issuance of the final rule. Given an effective date of 
September 16, 2024, the earliest nonbank registry implementation date 
is Wednesday, October 16, 2024, or 30 days after the final rule's 
effective date, and no entity will be required to submit any 
information to the nonbank registry before Tuesday, January 14, 2025.
    In addition, the reporting obligations imposed by the rule are 
modest. As discussed further in part VIII, the impact of the 
registration provisions of the rule on affected firms would be limited, 
and, relative to the baseline, the written-statement requirements 
should impose only modest costs on most covered entities. The Bureau 
disagrees with the industry commenter that covered nonbanks will be 
required to adopt costly new processes or hire a significant number of 
additional staff in order to achieve compliance with the final rule.

Final Rule

    The effective date of the final rule is September 16, 2024. This 
date is more than three months after the issuance of the rule, and more 
than 60 days after anticipated publication in the Federal Register. 
This is a longer time period than the 30 days in the proposed rule. 
This longer time period will provide additional time for covered 
nonbanks to prepare to comply with their obligations under the final 
rule.

VIII. Dodd-Frank Act Section 1022(b)(2) Analysis

A. Overview

    In developing this final rule, the Bureau has considered the rule's 
potential benefits, costs, and impacts.\463\

[[Page 56135]]

In developing this final rule, the Bureau has consulted with, or 
offered to consult with, the appropriate prudential regulators and 
other Federal agencies, including regarding consistency with any 
prudential, market, or systemic objectives administered by such 
agencies. Under CFPA sections 1022(c)(7)(C) and 1024(b)(7)(D), the 
Bureau has also consulted with State agencies regarding this final 
rule's requirements and registry.\464\
---------------------------------------------------------------------------

    \463\ Specifically, section 1022(b)(2)(A) of the CFPA requires 
the Bureau to consider the potential benefits and costs of the 
regulation to consumers and covered persons, including the potential 
reduction of access by consumers to consumer financial products and 
services; the impact of the proposed rule on insured depository 
institutions and insured credit unions with $10 billion or less in 
total assets as described in section 1026 of the CFPA; and the 
impact on consumers in rural areas. 12 U.S.C. 5512(b)(2)(A).
    \464\ 12 U.S.C. 5512(c)(7)(C), 5514(b)(7)(D).
---------------------------------------------------------------------------

    The Bureau is issuing this final rule to require nonbanks to report 
certain public agency and court orders imposing obligations based on 
violations of consumer protection laws because the creation and 
maintenance of a central repository for information regarding such 
public orders that have been imposed upon nonbank covered persons will 
support Bureau functions in a variety of ways and thus ultimately 
benefit consumers. The Bureau also believes that consumers, the public, 
and other potential users of the proposed registry would benefit if the 
Bureau publishes certain information from the registry, as it intends 
to do.\465\ In addition, the Bureau's receipt of annual supervisory 
reports from its supervised nonbanks regarding their compliance with 
such orders would facilitate the Bureau's supervisory efforts and 
assessment and detection of risks to consumers and help ensure that 
supervised nonbanks are legitimate entities and are able to perform 
their obligations to consumers.
---------------------------------------------------------------------------

    \465\ For more information on the issue of publication, see the 
section-by-section discussion of Sec.  1092.205.
---------------------------------------------------------------------------

    This final rule has three principal sets of substantive provisions, 
which are separately analyzed below. The first set of provisions 
(hereinafter referred to as the ``Registration Provisions'') will 
require nonbank covered persons that are subject to certain public 
orders to register with the Bureau and to submit certain information 
related to those public orders to the Bureau. The second set of 
provisions (hereinafter referred to as the ``Supervisory Reports 
Provisions'') will require nonbank covered persons that are subject to 
supervision and examination by the Bureau to prepare and submit an 
annual written statement, signed by a designated individual, regarding 
compliance with each covered public order. The third set of provisions 
(hereinafter referred to as the ``Publication Provisions'') describes 
the registration information the Bureau may make publicly available.
    The Bureau received multiple comments on the proposal stating that 
the proposed registry was redundant with existing registries and other 
published information, and in particular with the NMLS. See the 
section-by-section analysis of Sec.  1092.203 above for a discussion of 
these comments and the Bureau's response. Consistent with an approach 
suggested by commenters, the Bureau is adopting an express exception 
from the requirements of the rule for orders that are published on the 
NMLS Consumer Access website, except for orders issued or obtained at 
least in part by the Bureau; that exception may be exercised at the 
option of the covered nonbank. Nonbanks that exercise this option may 
submit a one-time registration regarding certain agency and court 
orders that are published on the NMLS Consumer Access website 
maintained at www.NMLSConsumerAccess.org, in lieu of complying with the 
other requirements of the rule with respect to the order. Such nonbanks 
will be required to submit certain limited information to the nonbank 
registry to enable the Bureau to identify the relevant nonbank and 
order and otherwise coordinate the nonbank registry with the NMLS. Upon 
exercising this option and submitting the required information about 
the relevant order, a nonbank will have no further obligation under 
subpart B to provide information to, or update information provided to, 
the nonbank registry regarding the order. By allowing this option, this 
final rule addresses many comments received and lowers the cost to 
firms of the final rule relative to the proposed rule.

B. Data Limitations and Quantification of Benefits, Costs, and Impacts

    The discussion below relies in part on information that the Bureau 
has obtained from commenters, other regulatory agencies, and publicly 
available sources. The Bureau has performed outreach with other 
regulatory agencies on many of the issues addressed by this final rule. 
However, as discussed further below, the data are generally limited 
with which to quantify the costs, benefits, and impacts of the final 
provisions. In light of these data limitations, the analysis below 
generally provides a qualitative discussion of the benefits, costs, and 
impacts of the final provisions. General economic principles and the 
Bureau's experience and expertise in consumer financial markets, 
together with the limited data that are available, provide insight into 
these benefits, costs, and impacts.

C. Baseline for Analysis

    In evaluating the benefits, costs, and impacts of the final rule, 
the Bureau takes as a baseline the current legal framework regarding 
orders that will be covered under the final rule. Therefore, the 
baseline for the analysis of the final rule is that nonbank covered 
persons are not required to register with the Bureau, nonbank covered 
persons subject to Bureau supervision and examination generally are not 
required to prepare and submit annual reports regarding compliance with 
public orders enforcing the law, and information on the nonbank covered 
persons and most corresponding covered orders is generally not 
published by the Bureau in the manner contemplated by the final rule.
    The final rule should affect the market as described below for as 
long as it is in effect. However, the costs, benefits, and impacts of 
any rule are difficult to predict far into the future. Therefore, the 
analysis below of the benefits, costs, and impacts of the final rule is 
most likely to be accurate for the first several years following 
implementation of the final rule.

D. Potential Benefits and Costs of the Final Rule to Consumers and 
Covered Persons

    With certain exceptions, the final rule will apply to covered 
persons as defined in the CFPA, including persons that engage in 
offering or providing a consumer financial product or service.\466\ 
Among others,\467\ these products and services generally include those 
listed below, at least to the extent they are offered or provided for 
use by consumers primarily for personal, family, or household purposes:
---------------------------------------------------------------------------

    \466\ For the full scope of the term ``covered person,'' see 12 
U.S.C. 5481(6).
    \467\ For the full scope of the term ``consumer financial 
product or service,'' see 12 U.S.C. 5481(5).
---------------------------------------------------------------------------

     Extending credit and servicing loans;
     Extending or brokering certain leases of personal or real 
property;
     Providing real estate settlement services;
     Engaging in deposit-taking activities, transmitting or 
exchanging funds, or otherwise acting as a custodian of funds;
     Selling, providing, or issuing stored value or payment 
instruments;
     Providing check cashing, check collection, or check 
guaranty services;

[[Page 56136]]

     Providing payments or other financial data processing 
products or services to a consumer by any technological means;
     Providing financial advisory services;
     Collecting, analyzing, maintaining, or providing consumer 
report information or certain other account information; and
     Collecting debt related to any consumer financial product 
or service.\468\
---------------------------------------------------------------------------

    \468\ See 12 U.S.C. 5481(15) (defining term ``financial product 
or service'').
---------------------------------------------------------------------------

    The Registration and Publication Provisions will affect such 
covered persons (as that term is defined in 12 U.S.C. 5481(6)) that (1) 
do not fall within any of the listed exclusions in Sec.  1092.201(d), 
such as those for insured depository institutions, insured credit 
unions, and related persons (as that term is defined in 12 U.S.C. 
5481(25)), and (2) have had covered orders issued against them. The 
Supervisory Reports Provisions will affect such covered persons that 
(1) are subject to supervision and examination by the Bureau pursuant 
to CFPA section 1024(a),\469\ (2) have had covered orders issued 
against them, (3) are at or above the $5 million annual receipt 
threshold, unless such covered persons are subject to certain 
exclusions, and (4) are not registering covered orders under the one-
time registration option for NMLS-published covered orders under Sec.  
1092.203.
---------------------------------------------------------------------------

    \469\ 12 U.S.C. 5514(a).
---------------------------------------------------------------------------

    A major benefit of the final rule is that it will give the Bureau 
comparatively high-quality data on the number and type of covered 
orders. Currently, the Bureau does not have high-quality data on the 
number of covered orders, nor does it have high-quality data on the 
number of nonbank covered persons that are subject to covered orders.
    To derive an estimate of the number of affected entities under the 
final rule using publicly available data, the Bureau used data from the 
most recent available Economic Census. Table 1 below presents entity 
counts for the North American Industry Classification System (NAICS) 
codes that generally align with the financial services and products 
listed above. The markets defined by NAICS codes in some cases include 
entities that will not qualify as covered nonbanks under the final 
rule. It is also possible that some covered nonbanks may not be counted 
in the table below, because, for example, the financial services they 
provide are not their primary line of business. The Bureau sought 
comment on NAICS codes not included in table 1 that include a 
significant number of entities that will be affected by the final rule, 
and no commenters recommended that other NAICS codes be included.

                 Table 1--Potential Scope of Final Rule
------------------------------------------------------------------------
                                                        Number of NAICS
          NAICS name(s)              NAICS code(s)         entities
------------------------------------------------------------------------
Nondepository Credit                            5222              14,330
 Intermediation..................
Activities Related to Credit                    5223              13,618
 Intermediation..................
Portfolio Management.............             523920              24,430
Investment Advice................             523930              17,510
Passenger Car Leasing............             532112                 449
Truck, Utility Trailer, and                   532120               1,612
 Recreational Vehicle Rental and
 Leasing.........................
Activities Related to Real Estate               5313              79,563
Consumer Reporting...............             561450                 307
Debt Collection..................             561440               3,224
                                  --------------------------------------
    Total........................  .................             155,043
------------------------------------------------------------------------

    Therefore, for purposes of its analysis of the final rule, the 
Bureau estimates that there are roughly 155,043 covered nonbanks. As 
noted above, covered nonbanks will only be affected by the rule if they 
are subject to covered orders. Based on its experience and expertise, 
the Bureau estimates that perhaps one percent, and at most five 
percent, of covered nonbanks are subject to covered orders. Therefore, 
the Bureau estimates that the rule would likely affect between 1,550 
and 7,752 covered nonbanks. The Bureau sought comment and submissions 
of data concerning the number and characteristics of covered nonbanks 
subject to covered orders but did not receive data contradicting its 
estimate. The Bureau also sought input on this subject during its 
consultation process with other Federal, State, and Tribal regulators. 
Notably, a coalition of State-regulator commenters with access to data 
from NMLS did not question the Bureau's estimate. Moreover, this 
coalition used the Bureau's estimate in combination with NMLS data to 
make arguments, which are discussed below, regarding the rule's 
potential impact on small entities and covered nonbanks subject to 
supervision and examination by the Bureau.
    However, a different commenter appeared to disapprove of the 
Bureau's estimates, asserting that the CFPB was merely guessing on the 
potential scope of its rule. This commenter did not provide other 
analytical approaches or data for the CFPB to consider when estimating 
the number of affected nonbanks, nor did the commenter provide a 
different estimate. In response to this comment, the Bureau sought to 
check the reasonableness of its estimate by obtaining data from a 
database titled ``Violation Tracker,'' maintained by Washington, DC-
based nonprofit Good Jobs First (https://violationtracker.goodjobsfirst.org/). The database collects reports of 
orders entered against companies for violating a wide range of laws. 
From the database, the Bureau obtained data on agency actions 
identified in the database as involving ``consumer-protection related 
offenses'' or ``financial offenses'' with penalty announcement dates 
between 2017 and April 2024. This data set includes roughly 13,200 
orders. The Bureau further limited the data to orders identified by the 
database as involving a ``primary offense type'' related to ``consumer 
protection,'' ``discriminatory practices (non-employment),'' 
``privacy,'' ``banking,'' ``mortgage abuses,'' or ``payday lending,'' 
which resulted in a collection of roughly 4,500 orders. Of these, some 
orders apply to the same entity. Taking those orders into account, the 
Bureau estimates that this set of orders applies to roughly 3,700-4,000 
unique entities. The Bureau

[[Page 56137]]

notes that these numbers are consistent with its estimate of the number 
of entities likely to be affected by the final rule (1,550 to 7,752 
covered nonbanks), which the Bureau provided in the proposal and 
reaffirms here.\470\
---------------------------------------------------------------------------

    \470\ The Bureau's analysis of the Violation Tracker data may 
exclude some covered nonbanks subject to covered orders. The 
Violation Tracker database excludes orders with penalties of less 
than $5,000, so the estimates above do not account for them. In 
addition, the filters that the Bureau has applied may have excluded 
some orders that would qualify as ``covered orders'' subject to the 
rule's requirements. Moreover, the Bureau has not verified the 
accuracy or completeness of the Violation Tracker data, so it is 
possible the data do not include some covered orders that would need 
to be registered under the rule.
    The estimates derived above also likely include some entities 
that are not covered nonbanks subject to covered orders. The 
Violation Tracker database does not purport to identify ``covered 
orders'' that would be subject to the final rule's registration 
requirements, and the ``primary offense types'' identified in the 
data may be highly overinclusive. Further, among the orders in the 
data set, the rule's registration requirements would apply only to 
those orders that remain in effect as of the rule's effective date, 
but the Bureau lacks data to exclude from its analysis of the 
Violation Tracker data orders that are no longer in effect. Indeed, 
the written statement provisions apply only to orders with an 
effective date on or after the applicable nonbank registry 
implementation date, so none of the orders described above will 
implicate the written statement provisions. The data include orders 
that may not be ``public'' as defined in the final rule; see Sec.  
1092.201(m) of the final rule. And many entities subject to the 
identified orders are insured depository institutions or insured 
credit unions and so will not be ``covered nonbanks'' under the 
final rule; see Sec.  1092.201(d)(1) of the final rule. Thus, many, 
and perhaps most, of the orders included in the estimates above are 
likely not ``covered orders'' under the final rule.
    Because of these caveats, the Bureau does not view the 3,700-
4,000 numbers derived above from the Violation Tracker database as a 
highly accurate estimate of the number of entities likely to be 
affected by the final rule. However, the Bureau finds that these 
data further confirm the reasonableness of the Bureau's estimate in 
the proposed rule of the number of entities that the rule will 
likely affect.
---------------------------------------------------------------------------

    The Bureau sought comment and submissions of data concerning the 
number and characteristics (such as annual revenues, number of 
employees, and main area of business) of covered nonbanks subject to 
covered orders. However, commenters generally did not provide, and the 
Bureau does not have, this kind of quantitative data to analyze the 
costs, benefits, and impacts of the final rule. In light of the limited 
data available to the Bureau on the number of covered nonbanks subject 
to covered orders, the analysis below focuses on the potential benefits 
and costs of the proposed rule for affected consumers and covered 
nonbanks.
1. Registration Provisions
    Under these final provisions, affected entities will have to 
provide: (1) identifying information and administrative information and 
(2) information regarding covered orders. The Bureau believes this 
information should be readily available to affected firms. Therefore, 
the cost of complying with the Registration Provisions for most 
affected firms should be on the order of a few hours of an employee's 
time. The cost would likely be even lower for firms that have and 
exercise the option to register NMLS-published covered orders under 
Sec.  1092.203. The cost may be higher for firms with several covered 
orders, or with covered orders that are frequently modified and are not 
registered under Sec.  1092.203's one-time-registration provisions.
    The Bureau generally expects that firms will know whether they are 
covered persons or are subject to covered orders. If a firm is unsure 
of its obligations under the Registration Provisions, one option would 
be to hire outside legal counsel to advise them on these issues. 
However, another option for such firms would be to register using the 
nonbank registry, even if doing so is not legally required. As 
explained above, the cost associated with registering an order is 
likely low--a few hours of an employee's time. In addition, if firms 
have a good-faith basis to believe they are not covered nonbanks (or 
that their orders are not covered orders), they may submit a notice to 
the nonbank registry stating such under Sec.  1092.202(g). Preparing 
and submitting such notices would take at most a few hours of an 
employee's time. The Bureau further notes that the mere act of 
registering an order or submitting a Sec.  1092.202(g) notice is 
unlikely to have significant indirect costs because Sec.  1092.102(c) 
would provide that the rule ``does not alter any applicable process 
whereby a person may dispute that it qualifies as a person subject to 
Bureau authority.'' Firms should generally choose the lowest-cost 
option available to them, and low-cost options--either registering 
under the nonbank registry or filing a notice under proposed Sec.  
1092.202(g)--are options available to firms.
    To obtain a quantitative estimate of the cost of this final 
provision, the Bureau assesses the average hourly base wage rate for 
the reporting requirement at $49.29 per hour. This is the mean hourly 
wage for employees in four major occupational groups assessed to be 
most likely responsible for the registration process: Management 
($66.23/hr); Legal Occupations ($64.34/hr); Business and Financial 
Operations ($43.55/hr); and Office and Administrative Support ($23.05/
hr).\471\ We multiply the average hourly wage of $49.29 by the private 
industry benefits factor of 1.42 to get a fully loaded wage rate of 
$70.00/hr.\472\ The Bureau includes these four occupational groups in 
order to account for the mix of specialized employees that may assist 
in the registration process. The Bureau assesses that the registration 
process will generally be completed by office and administrative 
support employees that are generally responsible for the registrant's 
paperwork and other administrative tasks. Employees specialized in 
business and financial operations or in legal occupations are likely to 
provide information and assistance with the registration process. 
Senior officers and other managers are likely to review the 
registration information before it is submitted and may provide 
additional information. Assuming as outlined above a fully loaded wage 
rate of roughly $70, and that complying with this provision would take 
around five hours of employees' time, yields a cost impact of around 
$350 per firm. Again, the cost would likely be even lower for firms 
that have and exercise the option to register NMLS-published covered 
orders under Sec.  1092.203. Because Sec.  1092.203 requires less 
information from covered nonbanks than Sec.  1092.202, exercising the 
option made available in Sec.  1092.203 should take even less employee 
time.\473\ Therefore, the impact of this final provision on affected 
firms will be limited.
---------------------------------------------------------------------------

    \471\ See U.S. Bureau of Labor Statistics, National Occupational 
Employment and Wage Estimates United States (May 2023), https://www.bls.gov/oes/current/oes_nat.htm. The hourly wage estimates used 
in the proposed rule were slightly different because they were drawn 
from 2021 data.
    \472\ As of December 2023, the ratio between total compensation 
and wages for private industry workers is 1.42. See U.S. Bureau of 
Labor Statistics, Employer Costs for Employee Compensation: Private 
industry dataset (December 2023), https://www.bls.gov/web/ecec/ecec-private-dataset.xlsx.
    \473\ In the unlikely event that a covered nonbank concluded 
that registering an NMLS-published covered order under Sec.  
1092.203 would be more costly than registering it under Sec.  
1092.202, the covered nonbank could forgo the option presented in 
Sec.  1092.203 and register the order under Sec.  1092.202 instead.
---------------------------------------------------------------------------

    One commenter appeared to disagree with the Bureau's cost estimate, 
objecting to the proposed rule because of the expense of submitting, 
monitoring, and updating the ``vast'' amount of information under the 
rule. As discussed in more detail above, the Bureau does not agree that 
the Registration Provisions require entities to submit ``vast'' amounts 
of information. The commenter did not elaborate on this point or 
provide alternative data or analysis to produce

[[Page 56138]]

an alternative cost estimate of the Registration Provisions. However, 
the Bureau agrees that entities registering orders under Sec.  1092.202 
may incur ongoing costs to comply with Sec.  1092.202(b)(2)(ii), which 
requires that covered nonbanks submit revised registration filings 
within 90 days after any amendment to a registered covered order or 
information required under Sec.  1092.202(c) or (d). Similarly, Sec.  
1092.202(f) requires a registered entity to submit a revised filing 
within 90 days if a covered order is terminated, modified, or 
abrogated, or if it ceases to be a covered order by operation of Sec.  
1092.202(e).\474\ The Bureau believes that the cost of those subsequent 
filings would generally be less than the cost of preparing and 
submitting the initial registration.
---------------------------------------------------------------------------

    \474\ Covered nonbanks registering NMLS-published covered orders 
under Sec.  1092.203 are not required to submit revised filings 
under Sec.  1092.202(b)(2)(ii) or (f).
---------------------------------------------------------------------------

    These final provisions will likely not provide any benefits for 
affected firms.
    These final provisions will give the CFPB comparatively high-
quality information on outstanding covered orders and the entities 
subject to those orders. That information will assist the Bureau in 
monitoring for risks to consumers in the offering or provision of 
consumer financial products or services. The registry will allow the 
Bureau to more effectively monitor for potential risks to consumers 
arising from both individual violations of consumer protection laws and 
broader patterns in such violations and enforcement actions intended to 
address them. Such monitoring, in turn, will help inform the Bureau's 
exercise of its other authorities. It will assist the Bureau in 
determining whether to prioritize certain entities for risk-based 
supervision, or to investigate whether certain entities have committed 
violations that warrant Bureau enforcement actions. The Bureau also 
anticipates that the Registration Provisions will give it more 
information on important gaps in existing consumer financial protection 
laws and will therefore improve future Bureau regulations. In addition, 
by providing the Bureau with more information on consumer harms in 
various markets, the Registration Provisions will improve the Bureau's 
consumer education efforts. All of these effects would benefit 
consumers.\475\ The Bureau does not have any data to quantify these 
benefits.
---------------------------------------------------------------------------

    \475\ The Bureau will achieve these benefits even for NMLS-
published covered orders registered under Sec.  1092.203 of the 
final rule. Although registrations under Sec.  1092.203 will include 
less information than under Sec.  1092.202, registrations under 
Sec.  1092.203 will notify the Bureau about the existence of the 
covered nonbank and the issuance of an applicable order against it. 
The Bureau will then generally be able to obtain further information 
about the order and the covered nonbank through the NMLS and the 
agency that issued or obtained the order.
---------------------------------------------------------------------------

    A joint letter by State regulators argued that the notice of 
proposed rulemaking overstated the benefits to the Bureau of the 
proposed rule. The letter asserted that the Bureau has not proven that 
there is a recidivism problem among nonbanks that would necessitate the 
creation of the Bureau's registry and that State regulators are 
effectively protecting consumers from repeat offenders through existing 
mechanisms and authorities. To substantiate this claim, the letter 
provided examples of instances in which agencies have brought actions 
against entities that have repeatedly violated the law. The Bureau 
agrees with the point that it and other regulators have at times 
successfully brought enforcement actions against entities that have 
repeatedly violated the law. But the Bureau disagrees with the 
commenter's view that this implies the Bureau and other regulators 
could not or should not improve their regulatory, supervisory, and 
enforcement activity. As described in the paragraph above, the registry 
will assist the Bureau in monitoring for risks to consumers in the 
offering or provision of consumer financial products or services. Among 
other things, the registry will assist the Bureau in analyzing trends 
in enforcement actions against covered nonbanks, including trends 
regarding nonbank recidivism. Notably the State regulators' joint 
letter provides no concrete data on such trends and instead only 
provides anecdotal examples of individual enforcement actions; 
providing data on such trends will be one benefit of the rule.
    The Registration Provisions will likely not impose any significant 
costs on consumers. As noted above, the final provisions would impose 
limited costs on a minority of firms in consumer finance markets. Firms 
are unlikely to raise prices as a consequence, given the minimal size 
of the cost increase and the fact that it is borne by a small portion 
of the overall market.
2. Supervisory Reports Provisions
    These final provisions will only affect covered nonbanks subject to 
Bureau supervision and examination. Furthermore, such covered nonbanks 
that have opted to register NMLS-published covered orders under Sec.  
1092.203 will not be subject to these final provisions with respect to 
such orders. Therefore, they will affect fewer covered nonbanks and 
fewer consumers than the Registration Provisions analyzed above.
    Some firms may be unsure whether they are supervised covered 
persons not otherwise excluded from the requirements of the final 
Supervisory Reports Provisions, or whether they are subject to covered 
orders, so they may be unsure whether they will have to comply with 
these final provisions. The Bureau notes that complying with these 
final provisions if it is legally unnecessary is unlikely to have 
greater costs than if it is legally necessary, because Sec.  
1092.102(c) provides that the rule does not alter applicable processes 
whereby a person may dispute that it qualifies as a person subject to 
Bureau authority. Also, under Sec.  1092.204(f), if a firm has a good-
faith basis to believe that it is not a supervised registered entity 
subject to the Supervisory Reports Provisions (or that its order is not 
a covered order), it may submit a notice to the nonbank registry 
stating as such. Preparing and submitting such a notice would take at 
most a few hours of an employee's time. Firms should generally choose 
the lowest-cost option available to them. Therefore, firms are unlikely 
to spend more to determine whether they need to comply with the 
Supervisory Reports Provisions than the cost to the firms of complying 
with the provisions or, for firms with a good-faith basis to believe 
they are not supervised registered entities (or their orders are not 
covered orders), of filing a Sec.  1092.203(f) notice.
    These provisions will require that affected supervised entities 
designate an attesting executive for each applicable covered order. The 
attesting executive will be a duly appointed senior executive officer 
(or, if no such officer exists, the highest-ranking individual at the 
entity charged with managerial or oversight responsibilities) (i) whose 
assigned duties include ensuring the supervised registered entity's 
compliance with Federal consumer financial law, (ii) who possesses 
knowledge of the supervised entity's systems and procedures for 
achieving compliance with the covered order, and (iii) who has control 
over the supervised entity's efforts to comply with the covered order. 
The Bureau believes that, even under the baseline scenario, most 
supervised entities would take active steps to comply with covered 
orders, and therefore would already have such an officer or individual 
in place to oversee the entity's compliance with its obligations under 
the covered order. Therefore, the Bureau anticipates that

[[Page 56139]]

this designation requirement would impose little or no additional cost 
on most supervised registered entities. The Bureau notes that the cost 
may be higher for supervised entities that lack a high-ranking officer 
or other employee with the requisite qualifications to serve as an 
attesting executive. But the Bureau believes that there would be few 
such entities because the Bureau expects most supervised registered 
entities maintain adequate board and management oversight consistent 
with an appropriate compliance management system.
    The Supervisory Reports Provisions will also require that the 
supervised registered entity submit a written statement signed by the 
applicable attesting executive for each covered order to which it is 
subject. In the written statement, the attesting executive will: (i) 
generally describe the steps that the attesting executive has 
undertaken to review and oversee the supervised registered entity's 
activities subject to the applicable covered order for the preceding 
calendar year; and (ii) attest whether, to the attesting executive's 
knowledge, the supervised registered entity during the preceding 
calendar year identified any violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order by the applicable agency or court based 
on a violation of a covered law.
    The Bureau cannot precisely quantify the impact of the written-
statement requirement on impacted firms. But based on its experience 
and expertise, the Bureau believes that most entities subject to 
covered orders endeavor in good faith to comply with them and will 
already have in place some manner of systems and procedures to help 
achieve such compliance. For these entities, the written-statement 
requirement will require little more than submitting a written 
statement from the attesting executive that generally describes the 
steps the executive took consistent with the established systems and 
procedures to reach conclusions regarding entity compliance with the 
orders. Thus, relative to the baseline, the written-statement 
requirement will impose only modest costs on most covered entities, 
related primarily to the time and effort needed to (i) memorialize the 
attesting executive's existing oversight of compliance and (ii) 
determine whether the supervised registered entity during the preceding 
calendar year identified any violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order by the applicable agency or court based 
on a violation of a covered law.
    While the attesting executive would sign the written statement, the 
Bureau expects that other employees in other major occupational groups 
(Legal Occupations, Business and Financial Operations, and Office and 
Administrative Support) would support the attesting executive in 
preparing the statement. Assuming that satisfying the written-statement 
requirement would take twenty hours of employees' time, and that the 
average cost to entities of an employee's time is roughly $70 an hour 
as discussed above, yields an estimate that the cost of this 
requirement on covered entities would be roughly $1,400 per firm.
    The Bureau acknowledges that, under the baseline, some supervised 
registered entities may not have in place systems and procedures to 
allow them to confidently identify violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order. As discussed elsewhere in this 
preamble, the Supervisory Reports Provisions will likely prompt some 
such entities to adopt new or additional compliance systems and 
procedures, imposing a greater cost on them. However, as noted above, 
based on its experience and expertise, the Bureau believes that most 
entities subject to covered orders endeavor in good faith to comply 
with them and will already have in place some manner of systems and 
procedures to help achieve such compliance. Therefore, the Bureau 
believes that the number of supervised registered entities that will 
put in place significant new compliance systems and procedures as a 
result of the rule will be relatively small.
    In addition, the Supervisory Reports Provisions will require 
entities to maintain records related to the written statement for five 
years. Conservatively assuming that ensuring the necessary documents 
are properly stored also requires ten hours of employee time adds $700 
to the costs to affected entities of these final provisions. One 
commenter stated that entities would have to pay for document retention 
and storage to comply with the proposed rule, but did not suggest that 
the Supervisory Reports Provisions' recordkeeping requirements would 
impose more than $700 in costs on affected entities.
    The Bureau notes that, for the purposes of the final rule, the term 
``supervised registered entity'' excludes persons with less than $5 
million in annual receipts resulting from offering or providing 
consumer financial products and services described in CFPA section 
1024(a).\476\ Relative to this final rule, the proposed rule further 
included in the term ``supervised registered entity'' persons with more 
than $1 million in annual receipts. Therefore, this final rule should 
impact fewer firms, with higher average annual receipts, than 
anticipated by the proposed rule. The combined costs of around $2,100 
imposed by the Supervisory Reports Provisions on the majority of 
affected entities should be roughly 0.04 percent or less of annual 
receipts.
---------------------------------------------------------------------------

    \476\ 12 U.S.C. 5514(a). See the section-by-section discussion 
of Sec.  1092.201(q)(4) for more information regarding how annual 
receipts are calculated.
---------------------------------------------------------------------------

    The costs of the Supervisory Reports Provisions may be higher in 
absolute terms at larger entities because identifying instances of 
noncompliance with obligations imposed in a public provision of a 
covered order may be more complex at larger entities. But because 
larger entities will generally have greater annual receipts, the 
applicable compliance costs as a percentage of annual receipts will 
likely remain nominal even for larger entities. The costs of the 
Supervisory Reports Provisions will also likely be higher at entities 
with multiple instances of noncompliance with public provisions of 
covered orders, or with multiple covered orders.
    Some commenters argued either that the Supervisory Reports 
Provisions would impose an undue burden or that the analysis in the 
proposed rule underestimated the costs imposed by the Supervisory 
Reports Provisions. Those commenters, however, did not provide data, 
information, or analysis to support their claims. Another commenter 
suggested a higher employee cost estimate of $118 per hour for work to 
prepare the written statement, based on the commenter's members' 
experience. The Bureau notes that, as discussed above, in data from the 
Bureau of Labor Statistics the highest wage rate among all occupations 
considered (for Management) is $66.23 per hour; multiplied by a 
benefits factor of 1.42 as discussed above, this yields an employee 
cost estimate of $94.05 per hour. Still, using the commenter's 
preferred hourly cost estimate yields a total cost estimate of roughly 
$2,400 per firm for the twenty hours of employees' time estimated to be 
required to prepare a written statement. This represents roughly .05 
percent of the annual revenue of an entity with annual revenue of $5 
million per year. Another commenter argued that the proposed rule's 
requirements were vague and so

[[Page 56140]]

would take more staff time, at a higher average hourly rate, than 
analyzed in the proposed rule; this commenter instead favored 
compliance cost estimates of $4,200-$7,200 for internal employees plus 
roughly $4,000 for outside counsel, for a total cost of $8,200-$12,200. 
The Bureau disagrees with this commenter's view that the rule's 
requirements are vague and will generally impose costs this high. 
Still, to put the commenter's estimates in perspective, the Bureau 
notes that $12,200 would still constitute less than .25 percent of 
annual receipts for firms with average annual receipts of at least $5 
million.
    Similarly, another commenter argued the Bureau significantly 
underestimated the amount of time involved with complying with the 
written-statement requirement; this commenter estimated that the time 
involved would be akin to the time spent by public companies preparing 
CEO and CFO certifications of Securities and Exchange Commission (SEC) 
filings under section 302 of the Sarbanes-Oxley Act and 18 U.S.C. 1350, 
which was enacted in section 906 of that Act.\477\ The Bureau disagrees 
that the time and internal verification processes associated with the 
CEO and CFO certifications under those provisions of the Sarbanes-Oxley 
Act are comparable to what is required to fulfill a supervised 
registered entity's obligations under the Supervisory Reports 
Provisions. Section 302 of the Sarbanes-Oxley Act required the SEC to 
issue a rule requiring CEOs and CFOs to certify in annual and quarterly 
reports that the reports do not contain material misstatements or 
misleading omissions and that they fairly present in all material 
respects the entity's financial condition and results of operations. 
Section 302 also required the SEC's rule to mandate that CEOs and CFOs 
make certain certifications regarding the entity's internal controls 
and disclosures to auditors. Similarly, under 18 U.S.C. 1350, when an 
issuer files a periodic report containing financial statements with the 
SEC, that report must be accompanied by a written statement from the 
CEO and CFO certifying that the periodic report fully complies with the 
requirements of section 13(a) or 15(d) of the Securities Exchange Act 
of 1934 and that the information contained in the report ``fairly 
presents, in all material respects, the financial condition and results 
of operations of the issuer.'' \478\ The commenter stated that these 
certifications typically require hundreds of hours and the involvement 
of a disclosure committee comprised of other professionals who, in 
addition to providing the CEO and CFO necessary assurances to support 
their certifications, may also provide their own sub-certifications.
---------------------------------------------------------------------------

    \477\ See Sarbanes-Oxley Act of 2002, Public Law 107-204, secs. 
302, 906, 116 Stat. 745, 777-78, 806.
    \478\ 18 U.S.C. 1350(b).
---------------------------------------------------------------------------

    The contents of the written statement required under the final rule 
here, by contrast, are of a more general, non-technical character and 
can be derived from the executive's own knowledge, with reference as 
needed to documents and information related to the entity's compliance 
with the covered order.\479\ The written statement merely requires a 
general description of the steps the executive has personally 
undertaken to review and oversee the supervised registered entity's 
activities subject to the applicable covered order, and a statement, 
``to the attesting executive's knowledge,'' of whether the supervised 
registered entity identified any violations or instances of 
noncompliance with applicable obligations under the order during the 
preceding calendar year.\480\ Because the written statement is far more 
limited than the certifications required under the cited provisions of 
the Sarbanes-Oxley Act, the Bureau does not believe that the costs of 
complying with those Sarbanes-Oxley Act provisions provide an 
appropriate benchmark for estimating the costs of the written-statement 
requirements. Indeed, as noted elsewhere in this preamble, this final 
rule does not establish any minimum procedures or otherwise specify the 
steps the attesting executive must take in order to review and oversee 
the supervised registered entity's activities. Nor does the final rule 
establish any minimum level of compliance management or expectation for 
compliance systems and procedures at supervised registered entities, or 
purport to impose any restrictions on the manner in which supervised 
registered entities address such matters. Therefore, the Bureau 
reaffirms its conclusion that, for most supervised registered entities, 
the written-statement provisions will impose only modest costs beyond 
the costs entities are already incurring to ensure compliance with 
covered orders.
---------------------------------------------------------------------------

    \479\ See Sec.  1092.204(c) of the final rule (requiring 
supervised registered entities to provide attesting executives 
access to documents and information necessary to make the written 
statement).
    \480\ Sec.  1092.204(d) of the final rule.
---------------------------------------------------------------------------

    As explained in greater detail in part IV(D) and the section-by-
section discussion of Sec.  1092.204 above, the Supervisory Reports 
Provisions will facilitate the Bureau's risk-based supervision efforts, 
including its efforts to assess compliance with the requirements of 
Federal consumer financial law, obtain information about the supervised 
entities' activities and compliance systems or procedures, and detect 
and assess risks to consumers and to markets for consumer financial 
products and services. All of these effects would benefit consumers. 
Moreover, while as noted above the Bureau believes that most entities 
subject to covered orders endeavor in good faith to comply with them 
and will already have in place some manner of systems and procedures to 
help achieve such compliance, it is also likely that these final 
provisions will cause a few entities without such systems and 
procedures to develop them. This will also benefit consumers. The 
Bureau does not have any data to quantify this benefit.
    One commenter agreed with the analysis above that most entities 
subject to covered orders already endeavor in good faith to comply with 
them, and so the number of supervised registered entities that will put 
in place significant new compliance systems and procedures as a result 
of the rule will be relatively small. However, this commenter argued 
that this in turn implies that the rule will have little compliance 
benefits. The Bureau agrees with this commenter that the final rule is 
unlikely to have a significant effect on the compliance efforts of the 
entities already endeavoring in good faith to comply with covered 
orders. But the Bureau also notes that the final rule will likely 
improve the compliance efforts of a smaller number of entities that 
under the baseline would not endeavor in good faith to comply with 
covered orders. As discussed in both the proposed rule and this 
preamble, this should have a number of beneficial effects for 
consumers.
    One commenter argued that the attestation requirement would divert 
entities' limited resources away from serving consumers. Similarly, 
another commenter argued the requirement would lead entities to 
prioritize compliance with covered orders over other compliance 
obligations, creating compliance risks for consumers. As stated above, 
the Bureau believes that no more than 5 percent of all covered nonbanks 
are subject to covered orders; of these many may have less than $5 
million in relevant annual receipts, otherwise not be supervised 
registered entities, or exercise their option to register NMLS-
published covered orders under Sec.  1092.203, so the number of firms 
impacted by the Supervisory

[[Page 56141]]

Reports Provisions should be limited. Finally, as argued above the 
Bureau expects that even entities subject to the Supervisory Reports 
Provisions will generally incur minor costs because of it. For these 
reasons the Bureau disagrees with these commenters that the Supervisory 
Reports Provisions would have any meaningful costs for consumers. 
Indeed, as described in the paragraph above, the Bureau believes this 
provision will benefit consumers, including through providing a further 
incentive for entities to comply with their legal obligations.
3. Publication Provisions
    For affected covered nonbanks, the main effect of these provisions 
will be that (1) their identifying information, (2) information 
regarding covered orders that they provide to the Bureau, and (3) for 
supervised registered entities, the name and title of the attesting 
executive, may be posted on the internet by the Bureau.\481\ Much of 
this information would be public even under the baseline, so the 
additional direct effect of this information being posted on the 
Bureau's website should be small. While as detailed below there will be 
indirect benefits and costs associated with improving accountability, 
general public awareness, and enforcement of consumer protection law, 
the Bureau does not anticipate publishing its registry would have a 
significant direct impact on consumer shopping decisions.
---------------------------------------------------------------------------

    \481\ As explained elsewhere in this preamble, the Bureau 
intends to publish this information but is retaining the discretion 
not to publish the information based on operational considerations, 
such as resource constraints. The analysis here assumes that the 
Bureau will effectuate its intended approach of publishing the 
stated information. If the Bureau were not to publish any of the 
information it collects under the final rule, the potential benefits 
and costs discussed in this section largely would not be realized, 
except that, to a more limited extent, some of the benefits and 
costs associated with the Publication Provisions could result from 
the Bureau's sharing of registry information with other government 
agencies under memorandums of understanding or other interagency 
arrangements. Similarly, if the Bureau were to publish only a 
portion of the information that it currently intends to publish, the 
benefits and costs of the Publication Provisions likely would be 
more limited than the benefits and costs associated with the 
Bureau's current publication plans.
---------------------------------------------------------------------------

    Because covered nonbanks will provide the required registry 
information only if they are subject to covered orders, consumers might 
interpret the presence of a covered nonbank on the Bureau's website as 
negative information about that covered nonbank. Therefore, these 
provisions may have negative reputational costs for covered nonbanks 
whose information is published on the Bureau website. Yet covered 
orders would be public information even under the baseline with no 
rule. Therefore, these provisions will not make public any non-public 
orders. This will limit the likely costs to covered nonbanks of these 
provisions.
    These final provisions will allow certain information related to 
covered orders that is already public to be centralized on the Bureau's 
website. This will make the information more readily accessible than it 
would otherwise be. One commenter argued that the proposed rule did not 
give any weight to this effect, but it was explicitly acknowledged in 
the proposed rule. A large body of research has studied the 
circumstances under which providing consumers better access to 
information does, and does not, improve consumer outcomes.\482\ One 
consensus from this research is that well-designed information 
disclosures can be effective at directing consumer attention. For 
example, one study found that providing certain borrowers with 
information about the costs of their loans reduced borrowing.\483\ 
However, another consensus from this research is that information 
disclosures do not always materially affect consumer decision-making, 
and that the impact of information disclosures on consumer decision-
making depends on their design and implementation. Impactful 
information disclosures are typically more direct (e.g., disclosing the 
costs of a particular type of loan to prospective borrowers) and more 
timely (e.g., disclosed to prospective borrowers at the time they are 
obtaining a loan) than the information that will be centralized and 
published under this final provision. Therefore, the Bureau believes 
that most consumers will not change their behavior directly because of 
this final provision, so the impact of this final provision on most 
affected entities will likely not be significant.
---------------------------------------------------------------------------

    \482\ For one review of this research, see Thomas A. Durkin and 
Gregory E. Elliehausen, Truth in Lending: Theory, History, and a Way 
Forward (2011).
    \483\ See Marianne Bertrand and Adair Morse, Information 
Disclosure, Cognitive Biases, and Payday Borrowing, 66 The Journal 
of Finance 1865, 1865-93 (2011).
---------------------------------------------------------------------------

    Many commenters agreed with this analysis, although one 
mischaracterized the proposed rule as arguing that consumers would be 
likely to use the public registry. In response to these comments, the 
Bureau notes that as discussed in the proposed rule the registry may 
benefit consumers in a number of ways beyond directly influencing their 
behavior. As discussed in the proposed rule, the Publication Provisions 
are likely to help government agencies, including the Bureau, enforce 
consumer protection laws. As noted by some commenters, the Publication 
Provisions may also help provide valuable information to other 
individuals or organizations, such as researchers, investors and 
business partners of covered persons, and media and advocacy 
organizations.\484\ Providing additional information to these entities 
through publication will also benefit consumers. Moreover, although the 
Bureau expects that a fraction of consumers may use the registry to 
make informed decisions in the market for consumer financial products 
and services, directly informing consumers of covered orders was not 
the exclusive purpose of the Publication Provisions in either the 
proposed or final rules.
---------------------------------------------------------------------------

    \484\ See part IV(F) and the section-by-section discussion of 
Sec.  1092.205 above.
---------------------------------------------------------------------------

    Commenters also argued that publishing the registry information 
will have a small effect on consumer behavior because the registered 
orders will already be public and available for consumers to review. 
While these comments appear to disagree with the comments discussed in 
the previous paragraph regarding the reasons why the Bureau's registry 
likely will have a small direct effect on consumer behavior, these 
commenters appear to agree with those in the previous paragraph, and 
with the Bureau, that the direct effect on consumer behavior will in 
fact be small. Again, this would imply that the Publication Provisions 
would impose only minor costs on affected entities resulting from 
changes in consumer behavior. And again, in response to these comments, 
the Bureau notes that directly informing consumers of covered orders 
was not the exclusive purpose of the Publication Provisions in either 
the proposed or final rules.
    Conversely, other commenters argued that the Bureau's analysis 
understates the reputational costs of publication, including to new and 
emerging financial institutions. These commenters, however, did not 
provide any support for this claim or provide an alternative estimate 
of the Publication Provisions' costs.
    Commenters also argued that the public registry would misinform 
consumers because consumers would not have the legal context to 
understand the orders. Similarly, another commenter argued that 
impacted entities would need to invest resources into combatting the 
reputational harm imposed by the Publication Provisions. These 
arguments, however, appear to

[[Page 56142]]

suppose that many consumers will themselves see, and change their 
behavior based on, the public orders, which as argued above (by both 
the Bureau and other commenters) is likely incorrect. While the Bureau 
agrees that some consumers, if they saw the covered orders, would find 
them to be complex and challenging to interpret, that is one reason the 
Bureau has concluded that the public registry would have less direct 
impact on consumers than other kinds of information disclosures that 
are generally found to be effective. The Bureau also reiterates its 
belief that few consumers would likely see these covered orders 
themselves, even under the final Publication Provisions.
    The Bureau acknowledges that the issues disclosed by a few covered 
orders may be so controversial among consumers that their publication 
on the Bureau's website could impose a substantial impact on the firms 
affected by those orders. However, as noted above, covered orders would 
be public information even under the baseline with no rule. Therefore, 
covered orders that disclose particularly controversial practices would 
likely be well known among consumers even under the baseline.
    Commenters also expressed concern that the Publication Provisions 
would result in increased litigation for covered nonbanks, both through 
enforcement actions by government agencies and through class action and 
other lawsuits by private litigants. The Bureau agrees that the public 
registry could provide some informational benefits to government 
enforcement agencies and private attorneys and would therefore impose 
corresponding enforcement, litigation, and insurance costs on some 
entities. As discussed above, the Publication Provisions may also help 
provide valuable information to other individuals or organizations, 
such as researchers, investors and business partners of covered 
persons, and media and advocacy organizations; providing information to 
these individuals or organizations may impose corresponding costs on 
entities affected by the Publication Provisions, such as costs to 
respond to publications based on information obtained from the Bureau's 
registry. The Bureau does not have any data with which to quantify 
these costs. However, as discussed above the Bureau believes that 
perhaps 1 percent and at most 5 percent of covered entities are subject 
to covered orders, and that among entities subject to covered orders, 
most endeavor in good faith to comply with them. Therefore, the Bureau 
expects that the Publication Provisions will only expose a small number 
of entities to increased costs. Moreover, the Bureau does not share the 
commenters' belief that providing information to government enforcement 
agencies and attorneys provides no benefit to consumers. To the 
contrary, as explained above, the Bureau views facilitating public and 
private enforcement of the Federal consumer financial laws as a benefit 
of this registry.\485\ The Bureau thus agrees with different commenters 
that the registry will help the CFPB, law enforcement community, and 
the public limit the harms from repeat violators of their legal 
obligations.
---------------------------------------------------------------------------

    \485\ See the section-by-section discussion of Sec.  1092.205 
above.
---------------------------------------------------------------------------

    One commenter noted that these final provisions could put affected 
entities at a competitive disadvantage relative to other entities in 
the market, by making information about them and the covered orders to 
which they are subject more accessible. The Bureau acknowledges that 
public awareness that an entity has been subjected to liability for 
violating a covered law may disadvantage that entity relative to other 
entities that have not been subjected to similar liability. However, 
the Publication Provisions would not make public any covered orders 
that were not already published (or required to be published). This in 
turn mitigates the direct effects of this final provision on 
marketplace competition.
    These final provisions could benefit firms in affected markets, 
even those without covered orders, by centralizing certain information 
on covered orders. This could give firms a clearer picture of how 
consumer financial protection laws are enforced across agencies and 
jurisdictions, and could reduce costs for firms that would conduct 
research into this question under the baseline. As noted by one 
commenter, these provisions may have benefits to other market 
participants, such as potential investors, contractual partners, 
financial firms, and others that are conducting due diligence on a 
registered nonbank.\486\ Providing the public, including firms, with 
information on the extent and nature of covered orders is consistent 
with the Bureau's congressionally assigned purpose of ensuring that 
consumer financial markets are fair, transparent, and competitive.\487\ 
The Bureau does not have any data with which to quantify these 
benefits.
---------------------------------------------------------------------------

    \486\ See discussion at part IV(F) above.
    \487\ 12 U.S.C. 5511(a).
---------------------------------------------------------------------------

    For consumers, one effect of the final provision will be improved 
access to information about covered nonbanks with covered orders. 
However, as noted above, this information would be public even under 
the baseline. Moreover, as discussed in more detail above, impactful 
information disclosures are typically more direct and more timely than 
the information that would be centralized and published under this 
provision. Therefore, the Bureau believes that most consumers will not 
change their behavior due to this final provision. As discussed in more 
detail above, many commenters agreed with this conclusion.
    By centralizing certain information on covered orders, another 
effect of the Publication Provisions will be to improve the ability of 
regulatory agencies besides the Bureau to conduct their activities, 
including supervision, enforcement, regulation, market monitoring, 
research, and consumer education. One commenter argued that the 
benefits of the rule for enforcement agencies were overstated in the 
proposed rule because covered orders are already public and because 
certain regulators are already aware of certain covered orders. 
However, the Bureau noted these points in the proposed rule. The Bureau 
argued in the proposed rule, and finds here, that the Publication 
Provisions would indirectly benefit consumers by centralizing certain 
information that is already public, which will assist agencies charged 
with enforcing Federal consumer financial laws with carrying out their 
responsibilities. Several commenters and consulting parties agreed that 
the proposed rule would help regulators and law enforcement. The Bureau 
does not have any data to quantify this benefit.
    The Publication Provisions will likely not impose any significant 
costs on consumers. As noted above, the provisions may impose some 
costs on some firms, and it is possible that those firms may respond to 
these increased costs by increasing prices for consumers. But as 
discussed above, the costs of these provisions on affected firms will 
be limited, so any cost increases caused by the rule will be limited at 
affected firms. Moreover, many firms will not be affected at all by 
these provisions and so will not raise prices because of these 
provisions.
    Finally, a number of commenters argued that the proposed rule, by 
increasing the costs to entities of consent orders, would discourage 
settlements in regulatory proceedings and so impose further costs on 
affected entities. The Bureau acknowledges that the final rule will 
increase the costs to entities of covered orders, and so may

[[Page 56143]]

have a marginal effect on the decision of some entities to settle. 
However, as argued above, the Bureau believes that the costs imposed by 
the final rule on entities subject to covered orders will be quite 
limited, so relative to the baseline, the final rule should increase 
the expected costs of settlement by little. Therefore, the Bureau 
believes that, among entities deciding whether to settle an enforcement 
action, it would be rare for costs imposed by this final rule to make a 
difference in the decision. Moreover, as noted above, the Bureau 
believes that perhaps one percent, and at most five percent, of covered 
nonbank entities are subject to covered orders. The small number of 
covered entities subject to covered orders strongly suggests that only 
a small percentage of such entities become subject to covered orders 
each year, and so could arguably be deciding whether to settle an 
enforcement matter that might result in a covered order. Therefore, the 
final rule should have only a small effect on the decisions of a small 
number of firms contemplating whether or not to settle.

E. Potential Specific Impacts of the Final Rule

1. Insured Depository Institutions and Insured Credit Unions With $10 
Billion or Less in Total Assets, as Described in Section 1026
    This final rule will only apply to nonbanks. Therefore, it will 
have no direct impacts on any insured depository institution or insured 
credit union. The rule may have some indirect effects on some insured 
depository institutions and insured credit unions with $10 billion or 
less in total assets. For example, insured depository institutions and 
insured credit unions that are affiliated with affected entities might 
experience indirect costs because the final rule may impose some costs 
on their nonbank affiliates. Insured depository institutions and 
insured credit unions that compete with affected entities might 
experience indirect benefits because of the proposed rule because the 
proposed rule may impose some costs on their competitors. But as noted 
above, even for nonbanks that are directly affected by the final rule, 
the Bureau does not anticipate that the rule's impact will be 
significant in most cases. Therefore, the Bureau anticipates that any 
indirect effects on insured depository institutions or insured credit 
unions with $10 billion or less in total assets will be even less 
significant.
2. Impact of the Proposed Rule on Access to Consumer Financial Products 
and Services and on Consumers in Rural Areas
    By imposing some costs on affected covered nonbanks, the final rule 
may cause affected covered nonbanks to provide fewer financial products 
and services (or financial products and services at higher cost) to 
consumers. However, as noted above, the final rule will likely impose 
only limited costs on a limited number of covered nonbanks. Therefore, 
the impact of the final rule on consumer access to financial products 
and services will be limited even at affected covered nonbanks. 
Moreover, bank and nonbank entities that will not be directly affected 
by the final rule could provide financial products and services to 
consumers that would otherwise obtain these financial products and 
services from affected covered nonbanks. Therefore, the negative impact 
of the final rule on consumer access to financial products and services 
would be limited. By improving the ability of the CFPB to conduct its 
activities, including supervision, enforcement, regulation, market 
monitoring, and consumer education, the final rule will likely improve 
the functioning of the broader market and so may also have positive 
effects on consumer access to consumer financial products or services 
provided in conformity with applicable legal obligations designed to 
protect consumers.
    Broadly, the Bureau believes that the analysis above of the impact 
of the final rule on consumers in general provides an accurate analysis 
of the impact of the final rule on consumers in rural areas. The impact 
of the final rule on consumers in rural areas will likely be relatively 
smaller if the proposed rule affects fewer entities in rural areas. 
High-quality data on the rural market share of entities that will be 
affected by the final rule does not exist, so the Bureau cannot judge 
with certainty the relative impact of the rule on rural areas. However, 
for certain large and well-studied markets, there is evidence that 
nonbanks have larger market shares in urban areas and smaller market 
shares in rural areas.\488\ Based on this limited evidence, the Bureau 
expects that the impact of the final rule will be smaller in rural 
areas.
---------------------------------------------------------------------------

    \488\ For evidence on the mortgage market, see Julapa Jagtiani, 
Lauren Lambie-Hanson, and Timothy Lambie-Hanson, Fintech Lending and 
Mortgage Credit Access, 1 The Journal of FinTech (2021). For 
evidence on the auto loan market, see Donghoon Lee, Michael Lee, and 
Reed Orchinik, Market Structure and the Availability of Credit: 
Evidence from Auto Credit, MIT Sloan Research Paper (2022), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3966710.
---------------------------------------------------------------------------

IX. Regulatory Flexibility Act Analysis

A. Overview

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct an initial regulatory flexibility analysis (IRFA) and a 
final regulatory flexibility analysis (FRFA) of any rule subject to 
notice-and-comment rulemaking requirements, unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities.\489\ The Bureau also is subject 
to certain additional procedures under the RFA involving the convening 
of a panel to consult with small business representatives before 
proposing a rule for which an IRFA is required.\490\
---------------------------------------------------------------------------

    \489\ 5 U.S.C. 601 et seq.
    \490\ 5 U.S.C. 609.
---------------------------------------------------------------------------

    A FRFA is not required for this final rule because it will not have 
a significant economic impact on a substantial number of small 
entities.

B. Impact of Final Provisions on Small Entities

    The final rule has three principal sets of substantive provisions, 
which are separately analyzed below. The first set of provisions 
(hereinafter referred to as the ``Registration Provisions'') will 
require nonbank covered persons that are subject to certain public 
agency and court orders enforcing the law to register with the Bureau 
and to submit certain information related to those public orders to the 
Bureau. The second set of provisions (hereinafter referred to as the 
``Supervisory Reports Provisions'') will require nonbank covered 
persons that are supervised by the Bureau to prepare and submit an 
annual written statement, signed by a designated individual, regarding 
compliance with each covered public order. The third set of provisions 
(hereinafter referred to as the ``Publication Provisions'') describes 
the registration information the Bureau may make publicly available.
    The analysis below evaluates the economic impact of the final 
provisions on small entities as defined by the

[[Page 56144]]

RFA.\491\ The RFA's definition of ``small'' varies by type of 
entity.\492\
---------------------------------------------------------------------------

    \491\ For purposes of assessing the impacts of the proposed rule 
on small entities, ``small entities'' is defined in the RFA to 
include small businesses, small not-for-profit organizations, and 
small government jurisdictions. 5 U.S.C. 601(6). A ``small 
business'' is determined by application of Small Business 
Administration regulations and reference to the North American 
Industry Classification System (NAICS) classifications and size 
standards. 5 U.S.C. 601(3). A ``small organization'' is any ``not-
for-profit enterprise which is independently owned and operated and 
is not dominant in its field.'' 5 U.S.C. 601(4). A ``small 
governmental jurisdiction'' is the government of a city, county, 
town, township, village, school district, or special district with a 
population of less than 50,000. 5 U.S.C. 601(5).
    \492\ U.S. Small Bus. Admin., Table of Small Business Size 
Standards Matched to North American Industry Classification System 
Codes, https://www.sba.gov/sites/default/files/2022-09/Table%20of%20Size%20Standards_NAICS%202022%20Final%20Rule_Effective%20October%201%2C%202022.pdf (current SBA size standards).
---------------------------------------------------------------------------

    With certain exceptions, the final rule will apply to covered 
persons as defined in the CFPA, including persons that engage in 
offering or providing a consumer financial product or service.\493\ 
Among others,\494\ these products and services would generally include 
those listed below, at least to the extent they are offered or provided 
for use by consumers primarily for personal, family, or household 
purposes.
---------------------------------------------------------------------------

    \493\ For the full scope of the term ``covered person,'' see 12 
U.S.C. 5481(6).
    \494\ For the full scope of the term ``consumer financial 
product or service,'' see 12 U.S.C. 5481(5).
---------------------------------------------------------------------------

     Extending credit and servicing loans;
     Extending or brokering certain leases of personal or real 
property;
     Providing real estate settlement services;
     Engaging in deposit-taking activities, transmitting or 
exchanging funds, or otherwise acting as a custodian of funds;
     Selling, providing, or issuing stored value or payment 
instruments;
     Providing check cashing, check collection, or check 
guaranty services;
     Providing payments or other financial data processing 
products or services to a consumer by any technological means;
     Providing financial advisory services;
     Collecting, analyzing, maintaining, or providing consumer 
report information or certain other account information; and
     Collecting debt related to any consumer financial product 
or service.\495\
---------------------------------------------------------------------------

    \495\ See 12 U.S.C. 5481(15) (defining term ``financial product 
or service'').
---------------------------------------------------------------------------

    The Registration and Publication Provisions will affect such 
covered persons (as that term is defined in 12 U.S.C. 5481(6)) that (1) 
do not fall within any of the listed exclusions in Sec.  1092.201(d), 
such as those for insured depository institutions, insured credit 
unions, and related persons (as that term is defined in 12 U.S.C. 
5481(25)), and (2) have had covered orders issued against them. The 
Supervisory Reports Provisions will affect such covered persons that 
(1) are subject to supervision and examination by the Bureau pursuant 
to CFPA section 1024(a),\496\ (2) have had covered orders issued 
against them, (3) are at or above the $5 million annual receipts 
threshold, unless such covered persons are subject to certain 
exclusions, and (4) are not registering covered orders under the one-
time registration option for NMLS-published covered orders under Sec.  
1092.203.
---------------------------------------------------------------------------

    \496\ 12 U.S.C. 5514(a).
---------------------------------------------------------------------------

    A major benefit of the final rule is that it will give the Bureau 
comparatively high-quality data on covered orders. Currently, the 
Bureau does not have high-quality data on the number of covered orders, 
nor does it have reliable information on the number of small, covered 
firms that are subject to covered orders. Therefore, the Bureau cannot 
reliably estimate the precise number of small entities that would be 
impacted by the final rule.
    One commenter argued that the Bureau could not explain why its rule 
would not have a significant economic impact on a substantial number of 
small entities because the Bureau had not provided clear information 
about the number of small entities that would be impacted by the rule. 
Other commenters asserted that the Bureau's rule would affect a 
substantial number of small entities, although they did not provide 
evidence to support this assertion. One commenter argued that the 
proposed rule would increase burdens for smaller financial technology 
companies in particular. In response to these comments, the Bureau 
notes that its certification under 5 U.S.C. 605(b) does not depend on 
the total number of small entities that would be affected by the rule. 
That is because the Bureau has concluded that, regardless of the number 
of affected small entities, the economic impact of the rule for the 
vast majority of affected small entities would not be significant. 
Therefore, even if a substantial number of small entities were affected 
by the rule,\497\ the rule still would not have a significant economic 
impact on a substantial number of small entities within the meaning of 
5 U.S.C. 605(b).
---------------------------------------------------------------------------

    \497\ To be clear, commenters have not presented data 
establishing that the final rule will in fact affect a substantial 
number of small entities. The Bureau here simply notes that, even if 
it were assumed that the final rule has some economic effect on a 
substantial number of small entities, that impact will not be 
significant for the vast majority of affected small entities.
---------------------------------------------------------------------------

    The SBA Office of Advocacy asked if it would be possible for the 
Bureau to obtain information on the number of small entities subject to 
covered orders from States or Federal agencies that have issued these 
covered orders. The Bureau indeed asked for similar information from 
Federal agencies, State regulators, State attorneys general, and tribes 
in interagency consultations for the proposed rule. The specific 
question asked was: ``Approximately how many public final orders are 
issued each year by agencies or courts in enforcement actions brought 
by Federal, State, Tribal governments, or local government agencies 
against covered person entities for violations of laws prohibiting 
unfair, deceptive, or abusive acts or practices, in cases involving 
consumer financial products or services? (In addition to the number of 
such orders, the CFPB is interested in information regarding the 
particular statutes or regulations prohibiting unfair, deceptive, or 
abusive acts or practices that are cited in such enforcement actions.) 
Approximately how many such orders are issued each year for violations 
of Federal consumer financial laws?'' The Bureau also asked a similar 
question in consultations for the final rule, as follows: 
``Approximately how many orders issued or obtained by your agency 
during the past seven years would qualify as `covered orders' as 
defined in the draft final rule?'' While not definitive, the responses 
the Bureau obtained to this question were consistent with its estimate 
above that perhaps one percent, and at most five percent, of covered 
entities are subject to covered orders. However, the Bureau concluded 
for several reasons that this information was still not sufficient to 
provide a rigorous quantitative estimate of the number of small 
entities subject to covered orders. First, most agencies with whom the 
Bureau consulted did not provide this requested information to the 
Bureau. Second, many of these agencies do not track the number of 
covered orders they have outstanding. Third, many of these agencies 
cannot reliably determine whether entities subject to covered orders 
qualify as ``small entities'' within the meaning of the RFA.
    The SBA Office of Advocacy also asked if it would be possible for 
the CFPB to use economic data from the Census Bureau's Statistics of 
U.S.

[[Page 56145]]

Businesses to extrapolate the number of affected small entities. These 
data indicate that, of entities listed in table 1 above, roughly 96 
percent are small. In the notice of proposed rulemaking, the Bureau did 
not estimate the number of small entities that will be affected by the 
final rule because, even with an estimate of the number of small 
entities in an industry, the Bureau could not provide a precise 
estimate of the number of such entities subject to covered orders. 
However, the Bureau notes that a conservative upper bound estimate of 
the number of small entities that will be affected by the final rule 
can be obtained if one assumes that all entities subject to covered 
orders are small.\498\ In this case, if at most 5 percent of all 
covered nonbanks are subject to covered orders and so will be affected 
by the final rule,\499\ all such affected entities are small, and 
roughly 96 percent of covered nonbanks in affected markets are small, 
then at most 5.2 percent of small covered nonbanks are subject to 
covered orders and so will be affected by the final rule.\500\ The 
Bureau reiterates that this 5.2 percent number provides a conservative 
upper bound on the fraction of small entities in relevant markets that 
will be affected by the final rule, and the actual fraction of small 
entities that will be affected by the final rule is likely to be 
smaller. Nonetheless, this analysis indicates that the rule will not in 
fact impact a substantial number of small entities. As explained above, 
however, the Bureau's certification under 5 U.S.C. 605(b) does not 
depend on the number of small entities affected by the rule.
---------------------------------------------------------------------------

    \498\ To be clear, it is not the case that all entities subject 
to covered orders are small entities. In response to comments, the 
Bureau here is merely using a simplifying assumption to derive a 
conservative upper bound estimate of the rule's potential impact on 
small entities.
    \499\ As explained above, the estimate that perhaps 1 percent, 
and at most 5 percent, of covered nonbanks are subject to covered 
orders is based on the Bureau's experience and expertise and is not 
disputed by commenters.
    \500\ Dividing 5% by 96% yields 5.2%.
---------------------------------------------------------------------------

    A joint letter from State regulators misinterpreted the proposed 
rule as arguing that because only 1 percent to 5 percent of covered 
nonbanks would need to comply with the proposed rule's registration and 
reporting requirements, the proposed rule would not have a significant 
economic impact on a substantial number of small entities. In the 
context of its discussion of the rule's impacts under CFPA section 
1022(b)(2)(A), the Bureau indeed estimated that between 1 percent and 5 
percent of all covered nonbanks (including both small entities and 
larger entities) might be impacted by the proposed rule. In its RFA 
analysis in the proposed rule, however, the Bureau did not estimate the 
percentage of covered-nonbank small entities that might be affected by 
the proposed rule. The Bureau's RFA analysis in the proposed rule thus 
did not rely on that 1-to-5 percent estimate, and the Bureau's RFA 
analysis here does not depend on that estimate, either. It is, however, 
notable that the State-regulator commenters, which have significant 
experience with enforcement actions against small entities and access 
to a substantial amount of information about such actions through the 
NMLS, do not argue that the percentage of covered-nonbank small 
entities with covered orders is substantially higher than 1 percent to 
5 percent. As noted above, if no more than approximately 5 percent of 
covered-nonbank small entities will have covered orders subject to the 
rule's requirements, then the rule will not impact a substantial number 
of small entities.
    The same state-regulator commenters cited NMLS data to argue that 
the proposed rule would predominantly impact small nonbank entities, 
because nearly 96 percent of state-licensed nonbank NMLS Call Report 
filers are small. As explained above, the Bureau's analysis of the 
Census Bureau's Statistics of U.S. Businesses data indicates that 
roughly 96 percent of entities listed in table 1 are small, so the 
Bureau agrees with these state-regulator commenters that a large 
majority of entities in affected markets are small. The Bureau notes 
that this does not necessarily imply that a large majority of affected 
entities are small, since among entities in affected markets, it is 
possible that large entities will disproportionately be subject to 
covered orders and thus will be disproportionately affected by the 
final rule. However, if one further assumes, as these commenters do, 
that small entities will be impacted by the rule in roughly the same 
proportion as other entities, the Bureau agrees that this indeed 
implies that a large majority of affected entities will be small. This 
finding merely reflects the fact that most nonbanks are likely small 
businesses under the Small Business Administration's regulations. Since 
most nonbanks likely qualify as small businesses, it is not surprising 
that a rule addressing orders entered against nonbanks would 
predominantly affect small businesses if small businesses were impacted 
in proportion to their representation among all businesses. This fact, 
however, does not affect the Bureau's assessment that the final rule 
here will not have a significant economic impact on a substantial 
number of small entities. As explained above, the final rule will not 
have a significant economic impact on the vast majority of affected 
entities, including affected small entities. Further, as also noted 
above, the state-regulator commenters do not argue that the percentage 
of covered-nonbank small entities with covered orders is substantially 
higher than 1 percent to 5 percent. Again, if no more than 5 percent of 
all covered nonbanks are subject to covered orders (as the commenters 
do not dispute), and roughly 96 percent of all covered nonbanks in 
affected markets are small (as the commenters and the Bureau agree), 
then no more than 5.2 percent of small covered nonbanks can possibly be 
subject to covered orders and so be affected by the final rule. This 
implies that the rule will not impact a substantial number of small 
entities (although, to reiterate, the Bureau's 5 U.S.C. 605(b) 
certification does not depend on that fact).
1. Registration Provisions
    The first set of provisions will require covered firms to register 
using the nonbank registry and submit certain required information. 
Required information includes identifying and administrative 
information, as well as information regarding covered orders. This 
information should be readily accessible to almost all entities 
affected, and providing it through the nonbank registry should be 
straightforward. Firms would not have to purchase new hardware or 
software, or train specialized personnel, to comply with these final 
provisions.
    To obtain a quantitative estimate of the cost of these provisions, 
the Bureau assesses the average hourly base wage rate for the reporting 
requirement at $49.29 per hour. This is the mean hourly wage for 
employees in four major occupational groups assessed to be most likely 
responsible for the registration process: Management ($66.23/hr); Legal 
Occupations ($64.34/hr); Business and Financial Operations ($43.55/hr); 
and Office and Administrative Support ($23.05/hr).\501\ We multiply the 
average hourly wage of $49.29 by the private industry benefits factor 
of 1.42 to get a

[[Page 56146]]

fully loaded wage rate of $70.00/hr.\502\ The Bureau includes these 
four occupational groups in order to account for the mix of specialized 
employees that may assist in the registration process. The Bureau 
assesses that the registration process will generally be completed by 
office and administrative support employees that are generally 
responsible for the registrant's paperwork and other administrative 
tasks. Employees specialized in business and financial operations or in 
legal occupations are likely to provide information and assistance with 
the registration process. Senior officers and other managers are likely 
to review the registration information before it is submitted and may 
provide additional information. Assuming as outlined above a fully 
loaded wage rate of roughly $70, and that complying with this final 
provision would take around five hours of employees' time, yields a 
cost impact of around $350 per firm. The cost would likely be even 
lower for firms that have and exercise the option to register NMLS-
published covered orders under Sec.  1092.203. Because Sec.  1092.203 
requires less information from covered nonbanks than Sec.  1092.202, 
exercising the option made available in Sec.  1092.203 should take even 
less employee time.\503\ Therefore, the impact of this final provision 
on affected firms will be limited.
---------------------------------------------------------------------------

    \501\ See U.S. Bureau of Labor Statistics, National Occupational 
Employment and Wage Estimates United States (May 2023), https://www.bls.gov/oes/current/oes_nat.htm. The hourly wage estimates used 
in the proposed rule were slightly different because they were drawn 
from 2021 data.
    \502\ As of December 2023, the ratio between total compensation 
and wages for private industry workers is 1.42. See U.S. Bureau of 
Labor Statistics, Employer Costs for Employee Compensation: Private 
industry dataset (December 2023), https://www.bls.gov/web/ecec/ecec-private-dataset.xlsx.
    \503\ In the unlikely event that a covered nonbank concluded 
that registering an NMLS-published covered order under Sec.  
1092.203 would be more costly than registering it under Sec.  
1092.202, the covered nonbank could forgo the option presented in 
Sec.  1092.203 and register the order under Sec.  1092.202 instead.
---------------------------------------------------------------------------

    Several commenters disagreed with this cost assessment.\504\ One 
preferred a higher estimate of $5,000 per year, based in part on the 
argument that the scope of administrative information is ``wholly 
unknown'' and can encompass a ``limitless breadth'' of information. The 
Bureau disagrees with these claims. As explained above,\505\ Sec.  
1092.202(c) only requires registered entities to submit the specific 
``administrative information'' that is ``required by the nonbank 
registry,'' and the Bureau has made clear that it will ``specify the 
types of . . . administrative information registered entities would be 
required to submit'' in ``filing instructions . . . issue[d] under . . 
. Sec.  1092.102(a).'' \506\ Therefore, covered nonbanks should have no 
need to hire outside legal counsel to ascertain what information 
qualifies as ``administrative information'' required to be submitted 
under the rule. Instead, the Bureau's filing instructions will specify 
what categories of information covered nonbanks must submit as 
``administrative information.''
---------------------------------------------------------------------------

    \504\ In this section, the Bureau discusses comments that 
focused primarily on the rule's potential effects on small entities. 
To the extent that these comments address the potential benefits and 
costs of the rule for covered persons, the Bureau recognizes that 
the comments are also relevant to its analysis under CFPA section 
1022(b)(2)(A); it did not duplicate its responses to those comments 
in its section 1022(b)(2)(A) discussion above simply to avoid 
unnecessary repetition. Similarly, the Bureau has not repeated here 
responses to comments about general impacts on covered persons that 
are adequately addressed in its section 1022(b)(2)(A) discussion 
above.
    \505\ See the section-by-section discussion of Sec.  1092.201(a) 
above.
    \506\ 88 FR 6088 at 6118.
---------------------------------------------------------------------------

    Another commenter based their disagreement on this cost assessment 
on the operational cost of developing new technologies and databases to 
satisfy the registration requirements. However, the Bureau does not 
believe many, if any, entities will have to develop new technologies 
and databases to comply with the Registration Provisions. Therefore, 
the Bureau believes its $350 estimate is reasonable.
    A joint letter from State regulators argued qualitatively that, 
because many small entities subject to covered orders are not subject 
to CFPB supervision, the costs imposed on them by the proposed rule 
would be larger than the Bureau estimated. However, the cost analysis 
performed both in the proposed rule and in this final rule does not 
presuppose supervision by the CFPB. Further, even if a covered nonbank 
is not subject to CFPB supervision, it would even under the baseline 
generally be expected to have systems in place to comply with its 
obligations under Federal consumer financial laws and other consumer-
protection laws, and the rule's registration requirements do not 
significantly add to the legal obligations to which covered nonbanks 
are already subject. Therefore, the Bureau again concludes that its 
$350 estimate is reasonable.
    Commenters also noted that the rule will impose ongoing costs on 
entities after initial registration. The Bureau agrees that entities 
registering orders under Sec.  1092.202 may incur ongoing costs to 
comply with Sec.  1092.202(b)(2)(ii), which requires that covered 
nonbanks submit revised registration filings within 90 days after any 
amendment to a registered covered order or information required under 
Sec.  1092.202(c) or (d). Similarly, Sec.  1092.202(f) requires a 
registered entity to submit a revised filing within 90 days if a 
covered order is terminated, modified, or abrogated, or if it ceases to 
be a covered order by operation of Sec.  1092.202(e).\507\ The Bureau 
believes that the cost of those subsequent filings would generally be 
less than the cost of preparing and submitting the initial 
registration. The Bureau also believes that most revised filings under 
Sec.  1092.202(b)(2)(ii) or (f) would be submitted after the initial 
year in which an entity first registers an order. In determining 
whether a significant economic impact on a substantial number of small 
entities (SISNOSE) exists, the Bureau calculates impacts on a periodic 
(usually annual) basis that is relative to firm revenue. If the 
analysis were extended past the initial year, calculated costs would 
increase with time, but so would calculated firm revenue. The Bureau 
believes that, in the case of the Registration Provisions, the ratio of 
the two--which is the relevant number for SISNOSE analysis--likely 
would not increase significantly over time, and in fact would very 
likely decrease, because the cost of submissions under Sec.  
1092.202(b)(2)(ii) or (f) would generally be less than the cost of 
preparing and submitting the initial registration.
---------------------------------------------------------------------------

    \507\ Covered nonbanks registering NMLS-published covered orders 
under Sec.  1092.203 are not required to submit revised filings with 
respect to such orders under Sec.  1092.202(b)(2)(ii) or (f).
---------------------------------------------------------------------------

    The same commenters also noted that firms with multiple orders will 
face higher costs. The Bureau agrees and noted this point in the 
proposed rule.\508\ The Bureau also notes that there are even fewer 
entities subject to multiple covered orders than there are entities 
subject to any covered order. The Bureau further notes that the average 
cost per order of registering orders is likely to be lower for firms 
with more covered orders, in part because some of the costs involved 
with registering orders (such as identifying and supplying the required 
administrative information) would generally only need to be incurred 
once.
---------------------------------------------------------------------------

    \508\ See 88 FR 6088 at 6131.
---------------------------------------------------------------------------

    Two commenters noted that even some entities not subject to covered 
orders would still be impacted by the proposed rule, if they were 
subject to orders they viewed as potentially covered, because they may 
have to determine if the potentially covered orders are actually 
covered. As it stated in the proposed rule, the Bureau agrees that some 
firms may be unsure whether

[[Page 56147]]

they are covered persons not otherwise excluded from the rule, or 
whether they are subject to covered orders. As stated in the proposed 
rule, for firms unsure of their obligations under the Registration 
Provisions, one option would be to hire outside legal counsel to advise 
them on these issues, which the Bureau agrees could be costly for small 
firms. However, another option for such firms would be to register 
using the nonbank registry, even if doing so is not legally required. 
As explained above and in the proposed rule, the cost associated with 
registering an order is likely low--a few hours of an employee's time. 
In addition, if firms have a good-faith basis to believe they are not 
covered nonbanks (or that their orders are not covered orders), they 
may submit a notice to the nonbank registry stating as such under Sec.  
1092.202(g). Preparing and submitting such notices would take at most a 
few hours of an employee's time. The Bureau further notes that the mere 
act of registering an order or submitting a Sec.  1092.202(g) notice is 
unlikely to have significant indirect costs because Sec.  1092.102(c) 
would provide that the rule ``does not alter any applicable process 
whereby a person may dispute that it qualifies as a person subject to 
Bureau authority.'' Firms should generally choose the lowest cost 
option available to them, and low-cost options--either registering 
under the nonbank registry or filing a notice under proposed Sec.  
1092.202(g)--are options available to firms.
2. Supervisory Reports Provisions
    This second set of provisions will require that affected supervised 
entities designate an attesting executive for each applicable covered 
order. The attesting executive will be a duly appointed senior 
executive officer (or, if no such officer exists, the highest-ranking 
individual at the entity charged with managerial or oversight 
responsibilities) (i) whose assigned duties include ensuring the 
supervised registered entity's compliance with Federal consumer 
financial law, (ii) who possesses knowledge of the supervised entity's 
systems and procedures for achieving compliance with the covered order, 
and (iii) who has control over the supervised entity's efforts to 
comply with the covered order. The Bureau believes that, even under the 
baseline scenario, most supervised entities would take active steps to 
comply with covered orders, and therefore would already have such an 
officer or individual in place to oversee the entity's compliance with 
its obligations under the covered order. Therefore, the Bureau 
anticipates that this designation requirement will impose little or no 
additional impact on most supervised registered entities. The Bureau 
notes that the impacts may be higher for supervised entities that lack 
a high-ranking officer or other employee with the requisite 
qualifications to serve as an attesting executive, but the Bureau 
believes that there are few such entities because the Bureau expects 
most supervised registered entities maintain adequate board and 
management oversight consistent with an appropriate compliance 
management system. Furthermore, covered nonbanks that have opted to 
register NMLS-published covered orders under Sec.  1092.203 will not be 
subject to the Supervisory Reports Provisions with respect to such 
orders.
    The Bureau sought comment on whether proposed section 203(b)'s 
designation requirement is likely to impose material additional impacts 
on supervised registered entities, beyond the impacts those entities 
are already likely to incur as part of fulfilling their obligations 
under the covered orders to which they are subject. The SBA Office of 
Advocacy claimed that, in the proposed rule, the Bureau provided no 
basis for its claim that most supervised entities would already have 
such an officer or individual in place. This claim is incorrect. In the 
proposed rule, as in this final rule, the Bureau explained its 
reasoning. The Bureau anticipates that most supervised entities will 
take active steps to comply with covered orders, as the law requires. 
Therefore, the Bureau believes that, even under the baseline scenario, 
most supervised entities would already have an officer or individual 
satisfying Sec.  1092.204(b)'s requirements in place to oversee the 
entity's compliance with its obligations under the covered order. This 
belief is supported by the Bureau's experience with supervising 
nonbanks, which includes examining their compliance systems. Based on 
its supervision experience, the Bureau believes it is unlikely that 
many entities subject to its supervision would have difficulty 
designating an individual who satisfies the criteria identified in 
Sec.  1092.204(b).
    The Supervisory Reports Provisions will also require that the 
supervised registered entity submit a written statement signed by the 
applicable attesting executive for each covered order to which it is 
subject. In the written statement, the attesting executive will: (i) 
generally describe the steps that the attesting executive has 
undertaken to review and oversee the supervised registered entity's 
activities subject to the applicable covered order for the preceding 
calendar year; and (ii) attest whether, to the attesting executive's 
knowledge, the supervised registered entity during the preceding 
calendar year identified any violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order by the applicable agency or court based 
on a violation of a covered law.
    The Bureau cannot precisely quantify the impact of the written-
statement requirement on impacted firms. But based on its experience 
and expertise, the Bureau believes that most entities subject to 
covered orders endeavor in good faith to comply with them and will 
already have in place some manner of systems and procedures to help 
achieve such compliance. For these entities, the proposed written-
statement requirement would require little more than submitting a 
written statement from the attesting executive that generally describes 
the steps the executive took consistent with the established systems 
and procedures to reach conclusions regarding entity compliance with 
the orders.
    Thus, relative to the baseline, the written-statement requirement 
will impose only modest costs on most covered entities, related 
primarily to the time and effort needed to (i) memorialize the 
attesting executive's existing oversight of compliance and (ii) 
determine whether the supervised registered entity during the preceding 
calendar year identified any violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order by the applicable agency or court based 
on a violation of a covered law. While the attesting executive will 
sign the written statement and generally describe the steps the 
executive has taken to oversee the supervised registered entity's 
activities subject to the applicable order, the Bureau expects that 
other employees in other major occupational groups (Legal Occupations, 
Business and Financial Operations, and Office and Administrative 
Support) will support the attesting executive in preparing the 
statement. Assuming that satisfying the written-statement requirement 
would take twenty hours of employees' time, and that the average cost 
to entities of an employee's time is roughly $70 an hour as discussed 
above, yields an estimate that the cost of this requirement on covered 
entities would be roughly $1,400 per entity.
    One commenter criticized this estimate, arguing that many small 
entities do not have employees in the various occupational groups 
assumed above and in particular would have to

[[Page 56148]]

contract with outside legal counsel to comply with the Supervisory 
Reports Provisions. However, the Bureau notes that the Supervisory 
Reports Provisions only requires that the attesting executive generally 
describe the steps the executive has taken to oversee compliance and 
state whether or not the company has identified a violation; it does 
not require the company to conduct any new analysis, legal or 
otherwise, in order to make that determination. The Supervisory Reports 
Provisions would not require, for example, an entity to hire counsel to 
conduct an assessment of past conduct for violations of orders it has 
not already identified. Therefore, for a sufficiently small entity that 
would be forced to employ management only (at a fully loaded wage rate 
of $66.23 times 1.42 or $94.05 per hour as discussed above) to satisfy 
the written-statement requirements, assuming again that compliance 
takes twenty hours of employee time, yields a cost estimate of 
approximately $1,881 for such firms. This is substantially lower than 
the $3,000 to $6,000 estimate provided by the commenter.
    The Bureau acknowledges that, under the baseline, some supervised 
registered entities may not have in place systems and procedures to 
allow them to confidently identify violations or other instances of 
noncompliance with any obligations that were imposed in a public 
provision of the covered order. As discussed elsewhere in this 
preamble, the Supervisory Reports Provisions will likely prompt some 
such entities to adopt new or additional compliance systems and 
procedures, imposing a greater cost on them. However, as noted above, 
based on its experience and expertise, the Bureau believes that most 
entities subject to covered orders endeavor in good faith to comply 
with them and will already have in place some manner of systems and 
procedures to help achieve such compliance. Therefore, the Bureau 
believes that the number of supervised registered entities that will 
put in place significant new compliance systems and procedures as a 
result of the final rule will be relatively small.
    Several commenters argued that employees would be reluctant to act 
as attesting executives because of the Supervisory Reports Provisions 
and would require a salary premium to do so, raising costs for affected 
entities. The Bureau acknowledges that, among entities subject to 
covered orders that lack adequate compliance systems, employees could 
indeed be reluctant to act as attesting executives under these 
provisions and might require a salary premium to do so. However, as 
discussed above, the Bureau believes that most entities that are 
subject to covered orders endeavor in good faith to comply with them. 
Therefore, the Bureau believes that most entities will already have in 
place some manner of systems and procedures to help achieve such 
compliance. As a result, attesting executives for most entities should 
not require a salary premium in order to comply with the written-
statement requirements. The Bureau acknowledges that some firms without 
sufficient systems and procedures in place to comply with covered 
orders may be forced to pay attesting executives a salary premium 
because of the Supervisory Reports Provisions, but believes that there 
will be few such firms. Furthermore, while the Bureau cannot precisely 
quantify the salary premium that would be required by attesting 
executives at such firms, the Bureau notes that an estimate of $25,000 
provided by one commenter represents less than .5 percent of annual 
receipts of entities with more than $5 million per year in annual 
receipts.
    In addition, the Supervisory Reports Provisions will require 
entities to maintain records related to the written statement for five 
years. Conservatively assuming that ensuring the necessary documents 
are properly stored also requires ten hours of employee time adds $700 
to the costs to affected entities of this final provision.
    One commenter appeared to disagree with this cost assessment and 
argued, in reference to the recordkeeping requirements of the 
Supervisory Reports Provisions, that the added costs of compliance 
would be significant enough to cause small entities in the debt-
collection industry material financial hardship, if not cause them to 
cease operations. However, this commenter did not directly dispute the 
Bureau's cost estimate of ten hours of employee time, nor did the 
commenter provide data or analysis to dispute this estimate, which as 
noted above implies a cost of compliance of roughly $700.
    The Bureau notes that, for the purposes of this final rule, the 
term ``supervised registered entity'' excludes persons with less than 
$5 million in annual receipts resulting from offering or providing 
consumer financial products and services described in CFPA section 
1024(a). Relative to this final rule, the proposed rule further 
included in the term ``supervised registered entity'' persons with more 
than $1 million in annual receipts. Therefore, relative to the proposed 
rule that was discussed by commenters, the Supervisory Reports 
Provisions will affect fewer small entities, and the entities they will 
affect will have higher annual receipts on average. The estimated 
combined costs of around $2,100 imposed by the Supervisory Reports 
Provisions as discussed above on most affected entities should be 
roughly 0.04 percent or less of annual receipts. Therefore, the impact 
of this final provision on most affected small entities will be 
limited.
    The costs of the Supervisory Reports Provisions may be higher at 
larger entities because identifying instances of noncompliance with 
obligations imposed in a public provision of a covered order may be 
more complex at larger entities. But because larger entities will 
generally have greater annual receipts, the applicable compliance costs 
as a percentage of annual receipts will likely remain nominal for 
larger entities, even if the absolute value of those compliance costs 
tends to increase as entity size increases. The costs will also likely 
be higher at entities with multiple instances of noncompliance with 
public provisions of covered orders, or with multiple covered orders. 
However, there are fewer entities subject to multiple covered orders 
than there are entities subject to any covered order.
    Two commenters claimed that the proposed rule did not contain any 
assessment of the burden of the rule on entities large enough to be 
both not exempt and supervised (and so subject to the Supervisory 
Reports Provisions) but small enough to satisfy the SBA's definition of 
``small.'' This claim is not correct. The proposed rule contained 
analysis, comparable to the analysis in this final rule above, on the 
effect of the Supervisory Reports Provisions on small entities. This 
means that the proposed rule analyzed the effect of the Supervisory 
Reports Provisions on small entities large enough to be impacted by it. 
The final rule here does the same.
3. Publication Provisions
    For affected covered nonbanks, the main effect of the third set of 
provisions will be that (1) their identifying information, (2) 
information regarding covered orders that they provide to the Bureau, 
and (3) for supervised registered entities, the name and title of the 
attesting executive, may be posted on the internet by the Bureau.\509\ 
Much of

[[Page 56149]]

this information would be public even under the baseline, so the 
additional direct effect of this information being posted on the 
Bureau's website should be small.
---------------------------------------------------------------------------

    \509\ As explained elsewhere in this preamble, the Bureau 
intends to publish this information but is retaining the discretion 
not to publish the information based on operational considerations, 
such as resource constraints. The analysis here assumes that the 
Bureau will effectuate its intended approach of publishing the 
stated information. If, however, the Bureau were not to publish any 
of the information it collects under the final rule, the potential 
impacts on small entities discussed in this section largely would 
not be realized--except that, to a more limited extent, some of the 
impacts associated with the Publication Provisions could result from 
the Bureau's sharing of registry information with other government 
agencies under memorandums of understanding or other inter-agency 
arrangements. Similarly, if the Bureau were to publish only a 
portion of the information that it currently intends to publish, the 
Publication Provisions' impacts on small entities likely would be 
more limited than the impacts associated with the Bureau's current 
publication plans.
---------------------------------------------------------------------------

    However, because covered nonbanks will provide this information 
only if they are subject to covered orders, consumers might interpret 
the presence of a covered nonbank on the Bureau's website as negative 
information about that covered nonbank. Therefore, these provisions may 
have negative reputational costs for the covered nonbanks whose 
information is published on the Bureau's website. Yet covered orders 
would be public information even under the baseline with no rule. 
Therefore, these provisions will not make public any non-public orders. 
This will limit the likely costs on covered nonbanks of these 
provisions.
    These provisions will allow certain information related to covered 
orders that is already available to the general public to be 
centralized on the Bureau's website. This will make the information 
more readily accessible than it would otherwise be. A large body of 
research has studied the circumstances under which providing consumers 
better access to information does, and does not, improve consumer 
outcomes.\510\ One consensus from this research is that well-designed 
information disclosures can be effective at directing consumer 
attention. For example, one study found that providing certain 
borrowers with information about the costs of their loans reduced 
borrowing.\511\ However, another consensus from this research is that 
information disclosures do not always materially affect consumer 
decision-making, and that the impact of information disclosures on 
consumer decision-making depends on their design and implementation. 
Impactful information disclosures are typically more direct (e.g., 
disclosing the costs of a particular type of loan to prospective 
borrowers) and more timely (e.g., disclosed to prospective borrowers at 
the time they are obtaining a loan) than the information that will be 
centralized and published under this final provision. Therefore, the 
Bureau believes that most consumers will not change their behavior due 
to this final provision, so the impact of this final provision on most 
affected entities will likely not be significant. The Bureau 
acknowledges that the issues disclosed by a few covered orders may be 
so controversial among consumers that their publication on the Bureau 
website could impose a substantial impact on the firms affected by 
those orders. However, as noted above, covered orders would be public 
information even under the baseline with no rule. Therefore, covered 
orders that disclose particularly controversial practices would likely 
be well-known among consumers even under the baseline. As a result, the 
Bureau believes that these final provisions are unlikely to have a 
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \510\ For one review of this research, see Thomas A. Durkin and 
Gregory Elliehausen, Truth in Lending: Theory, History, and a Way 
Forward (2011).
    \511\ See Marianne Bertrand and Adair Morse, Information 
Disclosure, Cognitive Biases, and Payday Borrowing, 66 The Journal 
of Finance 1865, 1865-93 (2011).
---------------------------------------------------------------------------

    The SBA Office of Advocacy critiqued the analysis of the 
Publication Provisions in the proposed rule as ``confusing and 
contradictory'' because it concluded that the Publication Provisions 
could have a significant impact on a few small entities but would not 
have a significant impact on a substantial number of small entities. 
But the possibility that a provision may have a significant economic 
impact on a limited number of small entities does not mean that the 
provision will have a significant economic impact on a substantial 
number of small entities. Because the Bureau has found that few small 
entities would be significantly affected by the Bureau's re-publication 
through its registry of orders that are already public, the Bureau has 
concluded that the possibility of such significant impacts in 
relatively rare cases does not indicate that a SISNOSE exists. The 
Bureau's conclusion about the impact of the Publication Provisions is 
therefore neither confusing nor contradictory.
    Another commenter argued that larger firms are more likely to have 
public relations funding to counteract the negative publicity of 
appearing on the Bureau's website, and so this provision would have an 
especially large relative effect on small firms. The Bureau 
acknowledges that larger firms are more likely to have more funding for 
public relations. However, the Bureau also notes that larger firms are 
also more likely to attract attention from consumers, regulators, the 
media, and other public parties. Hence the Bureau does not necessarily 
agree that this provision would have an especially large relative cost 
for small firms. Furthermore, even if a provision may have a somewhat 
larger effect on smaller firms, that does not mean that the provision 
has a significant economic impact on a substantial number of small 
entities. A relevant consideration in determining whether the provision 
here will have a significant economic impact on a substantial number of 
small entities is the fraction of small nonbank entities that will be 
significantly impacted by the provision. The commenter did not provide 
such estimates.
    For the reasons described above, the Bureau believes that no 
provision of the final rule will have a significant economic impact on 
a substantial number of small entities. Moreover, the impact of each 
provision is sufficiently small that the three provisions together will 
not have a significant economic impact on a substantial number of small 
entities.
    Accordingly, the Director certifies that this final rule will not 
have a significant economic impact on a substantial number of small 
entities. Thus, a FRFA is not required for this final rule.

X. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA),\512\ Federal 
agencies are generally required to seek approval from the Office of 
Management and Budget (OMB) for information collection requirements 
prior to implementation. Under the PRA, the Bureau may not conduct nor 
sponsor, and, notwithstanding any other provision of law, a person is 
not required to respond to, an information collection unless the 
information collection displays a valid control number assigned by OMB. 
The information collection requirements in this final rule are 
mandatory. Certain information collected under these requirements may 
be made available to the public, while other information would not be 
made available to the public, in accordance with applicable law.
---------------------------------------------------------------------------

    \512\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The collections of information contained in this rule, and 
identified as such, have been submitted to OMB for review under section 
3507(d) of the PRA. A complete description of the information 
collection requirements (including the burden estimate methods) is 
provided in the information collection request that the Bureau has 
submitted to OMB under the requirements of the PRA. The information 
collection request

[[Page 56150]]

submitted to OMB requesting approval under the PRA for the information 
collection requirements contained herein is available at 
www.regulations.gov as well as on OMB's public-facing docket at 
www.reginfo.gov.
    Title of Collection: Nonbank Registration--Agency and Court Orders 
Registration.
    OMB Control Number: 3170-0076.
    Type of Review: Request for approval of a new information 
collection.
    Affected Public: Private sector.
    Estimated Number of Respondents: 7,752.
    Estimated Total Annual Burden Hours: 35 hours.
    In the notice of proposed rulemaking, the Bureau invited comments 
on: (a) Whether the collection of information is necessary for the 
proper performance of the functions of the Bureau, including whether 
the information will have practical utility; (b) the accuracy of the 
Bureau's estimate of the burden of the collection of information, 
including the validity of the methods and the assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. The 
comments on the rule generally, and those relating to its burdens and 
utility, are summarized above. The Bureau is always interested in 
comments on its information collections, and how to improve their 
utility and reduce their burdens. These may be made at 
[email protected].

XI. Congressional Review Act

    Pursuant to the Congressional Review Act,\513\ the Bureau will 
submit a report containing this rule and other required information to 
the U.S. Senate, the U.S. House of Representatives, and the Comptroller 
General of the United States at least 60 days prior to the rule's 
published effective date. The Office of Information and Regulatory 
Affairs has designated this rule as a ``major rule'' as defined by 5 
U.S.C. 804(2).
---------------------------------------------------------------------------

    \513\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 1092

    Administrative practice and procedure, Consumer protection, Credit, 
Intergovernmental relations, Law enforcement, Nonbank registration, 
Registration, Reporting and recordkeeping requirements, Trade 
practices.

Authority and Issuance

    For the reasons set forth above, the Bureau amends 12 CFR chapter X 
by adding part 1092 to read as follows:

PART 1092--NONBANK REGISTRATION

Subpart A--General
Sec.
1092.100 Authority and purpose.
1092.101 General definitions.
1092.102 Submission and use of registration information.
1092.103 Severability.
Subpart B--Registry of Nonbank Covered Persons Subject to Certain 
Agency and Court Orders
1092.200 Scope and purpose.
1092.201 Definitions.
1092.202 Registration and submission of information regarding 
covered orders.
1092.203 Optional one-time registration of NMLS-published covered 
orders.
1092.204 Annual reporting requirements for supervised registered 
entities.
1092.205 Publication and correction of registration information.
1092.206 Nonbank registry implementation dates.
Subpart C--[Reserved]

Appendix A to Part 1092--List of State Covered Laws

    Authority:  12 U.S.C. 5512(b) and (c); 12 U.S.C. 5514(b).

Subpart A--General


Sec.  1092.100   Authority and purpose.

    (a) Authority. The regulation in this part is issued by the Bureau 
pursuant to section 1022(b) and (c) and section 1024(b) of the Consumer 
Financial Protection Act of 2010, codified at 12 U.S.C. 5512(b) and 
(c), and 12 U.S.C. 5514(b).
    (b) Purpose. The purpose of this part is to prescribe rules 
governing the registration of nonbanks, and the collection and 
submission of registration information by such persons, and for public 
release of the collected information as appropriate.
    (1) This subpart contains general provisions and definitions used 
in this part.
    (2) Subpart B of this part sets forth requirements regarding the 
registration of nonbanks subject to certain agency and court orders.


Sec.  1092.101   General definitions.

    For the purposes of this part, unless the context indicates 
otherwise, the following definitions apply:
    (a) Affiliate, consumer, consumer financial product or service, 
covered person, Federal consumer financial law, insured credit union, 
person, related person, service provider, and State have the same 
meanings as in 12 U.S.C. 5481.
    (b) Bureau means the Consumer Financial Protection Bureau.
    (c) Include, includes, and including mean that the items named may 
not encompass all possible items that are covered, whether like or 
unlike the items named.
    (d) Nonbank registry means the Bureau's electronic registry 
identified and maintained by the Bureau for the purposes of this part.
    (e) Nonbank registry implementation date means, for a given 
requirement or subpart of this part, or a given person or category of 
persons, the date(s) determined by the Bureau to commence the 
operations of the nonbank registry in connection with that requirement 
or subpart.


Sec.  1092.102   Submission and use of registration information.

    (a) Filing instructions. The Bureau shall specify the form and 
manner for electronic filings and submissions to the nonbank registry 
that are required or made voluntarily under this part. The Bureau also 
may provide for extensions of deadlines or time periods prescribed by 
this part for persons affected by declared disasters or other emergency 
situations.
    (b) Coordination or combination of systems. In administering the 
nonbank registry, the Bureau may rely on information a person 
previously submitted to the nonbank registry under this part and may 
coordinate or combine systems in consultation with State agencies as 
described in 12 U.S.C. 5512(c)(7)(C) and 12 U.S.C. 5514(b)(7)(D).
    (c) Bureau use of registration information. The Bureau may use the 
information submitted to the nonbank registry under this part to 
support its objectives and functions, including in determining when to 
exercise its authority under 12 U.S.C. 5514 to conduct examinations and 
when to exercise its enforcement powers under subtitle E of the 
Consumer Financial Protection Act of 2010. However, this part does not 
alter any applicable process whereby a person may dispute that it 
qualifies as a person subject to Bureau authority.
    (d) Calculation of time periods. In computing any date or period of 
time prescribed by this part, exclude the day of the event that 
triggers the period; count every day, including intermediate Saturdays, 
Sundays, and Federal holidays; and include the last day of the period. 
If any provision of this part would establish a deadline for an action 
that is a Saturday, Sunday, or Federal

[[Page 56151]]

holiday, the deadline is extended to the next day that is not a 
Saturday, Sunday, or Federal holiday.


Sec.  1092.103   Severability.

    If any provision of this part, or any application of a provision, 
is stayed or determined to be invalid, the remaining provisions or 
applications are severable and shall continue in effect.

Subpart B--Registry of Nonbank Covered Persons Subject to Certain 
Agency and Court Orders


Sec.  1092.200   Scope and purpose.

    (a) Scope. This subpart requires nonbank covered persons that are 
subject to certain public agency and court orders to register with the 
Bureau and to submit a copy of each such public order to the Bureau. 
This subpart also requires certain nonbank covered persons that are 
supervised by the Bureau to prepare and submit an annual written 
statement, signed by a designated individual, regarding compliance with 
each such public order. Finally, this subpart also describes the 
registration information the Bureau may make publicly available.
    (b) Purpose. The purposes of the information collection 
requirements contained in this subpart are:
    (1) To support Bureau functions by monitoring for risks to 
consumers in the offering or provision of consumer financial products 
or services, including developments in markets for such products or 
services, pursuant to 12 U.S.C. 5512(c)(1);
    (2) To prescribe rules regarding registration requirements 
applicable to nonbank covered persons, pursuant to 12 U.S.C. 
5512(c)(7);
    (3) To facilitate the supervision of persons described in 12 U.S.C. 
5514(a)(1), pursuant to 12 U.S.C. 5514(b);
    (4) To assess and detect risks to consumers, pursuant to 12 U.S.C. 
5514(b); and
    (5) To ensure that persons described in 12 U.S.C. 5514(a)(1) are 
legitimate entities and are able to perform their obligations to 
consumers, pursuant to 12 U.S.C. 5514(b).


Sec.  1092.201   Definitions.

    For the purposes of this subpart, unless the context indicates 
otherwise, the following definitions apply:
    (a) Administrative information means contact information regarding 
persons subject to this subpart and other information submitted or 
collected to facilitate the administration of the nonbank registry 
including information submitted under Sec. Sec.  1092.202(g) and 
1092.204(f).
    (b) Attesting executive means, with respect to any covered order 
regarding a supervised registered entity, the individual designated by 
the supervised registered entity to perform the supervised registered 
entity's duties with respect to the covered order under Sec.  1092.204.
    (c) Covered law means a law listed in paragraphs (c)(1) through (6) 
of this section, to the extent that the violation of law found or 
alleged arises out of conduct in connection with the offering or 
provision of a consumer financial product or service:
    (1) A Federal consumer financial law;
    (2) Any other law as to which the Bureau may exercise enforcement 
authority;
    (3) The prohibition on unfair or deceptive acts or practices under 
section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, or any 
rule or order issued for the purpose of implementing that prohibition;
    (4) A State law prohibiting unfair, deceptive, or abusive acts or 
practices that is identified in appendix A to this part;
    (5) A State law amending or otherwise succeeding a law identified 
in appendix A to this part, to the extent that such law is materially 
similar to its predecessor; or
    (6) A rule or order issued by a State agency for the purpose of 
implementing a prohibition on unfair, deceptive, or abusive acts or 
practices contained in a State law described in paragraph (c)(4) or (5) 
of this section.
    (d) Covered nonbank means a covered person that is not any of the 
following:
    (1) An insured depository institution or insured credit union;
    (2) A person who is a covered person solely due to being a related 
person;
    (3) A State;
    (4) A natural person;
    (5) A motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both, within the meaning of 12 U.S.C. 5519(a), 
except to the extent such a person engages in functions that are 
excepted from the application of 12 U.S.C. 5519(a) as described in 12 
U.S.C. 5519(b); or
    (6) A person that qualifies as a covered person based solely on 
conduct that is the subject of, and that is not otherwise exempted 
from, an exclusion from the Bureau's rulemaking authority under 12 
U.S.C. 5517.
    (e) Covered order--(1) In general. Covered order means a final 
public order issued by an agency or court, whether or not issued upon 
consent, that:
    (i) Identifies a covered nonbank by name as a party subject to the 
order;
    (ii) Was issued at least in part in any action or proceeding 
brought by any Federal agency, State agency, or local agency;
    (iii) Contains public provisions that impose obligations on the 
covered nonbank to take certain actions or to refrain from taking 
certain actions;
    (iv) Imposes such obligations on the covered nonbank based on an 
alleged violation of a covered law; and
    (v) Has an effective date on or later than January 1, 2017.
    (2) Exception. The term ``covered order'' does not include an order 
issued to a motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both, within the meaning of 12 U.S.C. 5519(a), 
except to the extent such order is in connection with the functions 
that are excepted from the application of 12 U.S.C. 5519(a) as 
described in 12 U.S.C. 5519(b).
    (f) Effective date means, in connection with a covered order, the 
effective date as identified in the covered order; provided that if no 
other effective date is specified, then the date on which the covered 
order was issued shall be treated as the effective date for purposes of 
this subpart. If the issuing agency or a court stays or otherwise 
suspends the effectiveness of the covered order, the effective date 
shall be delayed until such time as the stay or suspension of 
effectiveness is lifted.
    (g) Identifying information means existing information available to 
the covered nonbank that uniquely identifies the covered nonbank, 
including the entity's legal name, State (or other jurisdiction) of 
incorporation or organization, principal place of business address, any 
doing business as or fictitious business names, and any unique 
identifiers issued by a government agency or standards organization.
    (h) Insured depository institution has the same meaning as in 12 
U.S.C. 5301(18)(A).
    (i) Local agency means a regulatory or enforcement agency or 
authority of a county, city (whether general law or chartered), city 
and county, municipal corporation, district, or other political 
subdivision of a State, other than a State agency.
    (j) NMLS means the Nationwide Multistate Licensing System.
    (k) NMLS-published covered order means a covered order that is 
published on the NMLS Consumer Access website,

[[Page 56152]]

www.NMLSConsumerAccess.org, except that no covered order issued or 
obtained at least in part by the Bureau shall be an NMLS-published 
covered order.
    (l) Order includes any written order or judgment issued by an 
agency or court in an investigation, matter, or proceeding.
    (m) Public means, with respect to a covered order or any portion 
thereof, published by the issuing agency or court, or required by any 
provision of Federal, State, or local law, rule, or order to be 
published by the issuing agency or court. The term does not include 
orders or portions of orders that constitute confidential supervisory 
information of any Federal, State, or local agency.
    (n) Registered entity means any person registered or required to be 
registered under this subpart.
    (o) Remain(s) in effect means, with respect to any covered order, 
that the covered nonbank remains subject to public provisions that 
impose obligations on the covered nonbank to take certain actions or to 
refrain from taking certain actions based on an alleged violation of a 
covered law.
    (p) State agency means the attorney general (or the equivalent 
thereof) of any State and any other State regulatory or enforcement 
agency or authority.
    (q) Supervised registered entity means a registered entity that is 
subject to supervision and examination by the Bureau pursuant to 12 
U.S.C. 5514(a) except as provided in paragraphs (q)(1) through (4) of 
this section. For purposes of this definition, the term ``subject to 
supervision and examination by the Bureau pursuant to 12 U.S.C. 
5514(a)'' includes an entity that qualifies as a larger participant of 
a market for consumer financial products or services under any rule 
issued by the Bureau pursuant to 12 U.S.C. 5514(a)(1)(B) and (a)(2), or 
that is subject to an order issued by the Bureau pursuant to 12 U.S.C. 
5514(a)(1)(C). The term ``supervised registered entity'' does not 
include:
    (1) A service provider that is subject to Bureau examination and 
supervision solely in its capacity as a service provider and that is 
not otherwise subject to Bureau supervision and examination;
    (2) A motor vehicle dealer that is predominantly engaged in the 
sale and servicing of motor vehicles, the leasing and servicing of 
motor vehicles, or both, within the meaning of 12 U.S.C. 5519(a), 
except to the extent such a person engages in functions that are 
excepted from the application of 12 U.S.C. 5519(a) as described in 12 
U.S.C. 5519(b);
    (3) A person that qualifies as a covered person based solely on 
conduct that is the subject of, and that is not otherwise exempted 
from, an exclusion from the Bureau's supervisory authority under 12 
U.S.C. 5517; or
    (4) A person with less than $5 million in annual receipts resulting 
from offering or providing all consumer financial products and services 
described in 12 U.S.C. 5514(a). For purposes of this exclusion:
    (i) The term ``annual receipts'' has the same meaning as that term 
has in 12 CFR 1090.104(a); and
    (ii) A person's receipts from offering or providing a consumer 
financial product or service subject to a larger participant rule under 
12 U.S.C. 5514(a)(1)(B) count as receipts for purposes of the exclusion 
in this paragraph (q)(4) regardless of whether the person qualifies as 
a larger participant.


Sec.  1092.202   Registration and submission of information regarding 
covered orders.

    (a) Scope of registration requirement. This section shall apply 
only with respect to covered orders with an effective date on or after 
the effective date of this subpart, or that remain in effect as of the 
effective date of this subpart.
    (b) Requirement to register and submit information regarding 
covered orders. (1) Each covered nonbank that is identified by name as 
a party subject to a covered order described in paragraph (a) of this 
section shall register as a registered entity with the nonbank registry 
in accordance with this section if it is not already so registered, and 
shall provide or update, as applicable, the information described in 
this subpart in the form and manner specified by the Bureau.
    (2) Each covered nonbank required to register under this section 
shall:
    (i) Submit a filing containing the information described in 
paragraphs (c) and (d) of this section to the nonbank registry within 
the later of 90 days after the applicable nonbank registry 
implementation date under Sec.  1092.206 or 90 days after the effective 
date of any applicable covered order; and
    (ii) Submit a revised filing amending any information described in 
paragraphs (c) and (d) of this section to the nonbank registry within 
90 days after any amendments are made to the covered order or any of 
the information described in paragraph (c) or (d) of this section 
changes.
    (c) Required identifying information and administrative 
information. A registered entity shall provide all identifying 
information and administrative information required by the nonbank 
registry. In filing instructions issued pursuant to Sec.  1092.102(a), 
the Bureau may require that covered nonbanks that are affiliates make 
joint or combined submissions under this section.
    (d) Information regarding covered orders. A registered entity shall 
provide the following information for each covered order subject to 
this section:
    (1) A fully executed, accurate, and complete copy of the covered 
order, in a format specified by the Bureau; provided that any portions 
of a covered order that are not public shall not be submitted, and 
these portions shall be clearly marked on the copy submitted;
    (2) In connection with each applicable covered order, information 
identifying:
    (i) The agency(ies) and court(s) that issued or obtained the 
covered order, as applicable;
    (ii) The effective date of the covered order;
    (iii) The date of expiration, if any, of the covered order, or a 
statement that there is none;
    (iv) All covered laws found to have been violated or, for orders 
issued upon the parties' consent, alleged to have been violated; and
    (v) Any docket, case, tracking, or other similar identifying 
number(s) assigned to the covered order by the applicable agency(ies) 
or court(s).
    (3) If the registered entity is a supervised registered entity, the 
name and title of its attesting executive for purposes of Sec.  
1092.204 with respect to the covered order.
    (e) Expiration of covered order status. A covered order shall cease 
to be a covered order for purposes of this subpart as of the later of:
    (1) Ten years after its effective date; or
    (2) If the covered order expressly provides for a termination date 
more than ten years after its effective date, the expressly provided 
termination date.
    (f) Requirement to submit revised and final filings with respect to 
certain covered orders. (1) If a covered order is terminated, modified, 
or abrogated (whether by its own terms, by action of the applicable 
agency, or by a court), or if an order ceases to be a covered order for 
purposes of this subpart by operation of paragraph (e) of this section, 
the registered entity shall submit a revised filing to the nonbank 
registry within 90 days after the effective date of such termination, 
modification, or abrogation, or the date such order ceases to be a 
covered order.
    (2) If, due to such termination, modification, or abrogation of a 
covered order, or due to the application of paragraph (e) of this 
section, the order

[[Page 56153]]

no longer remains in effect or is no longer a covered order, then, 
following its final filing under paragraph (f)(1) of this section with 
respect to such covered order, the registered entity will have no 
further obligation to update its filing or to file written statements 
with respect to such covered order under this subpart.
    (g) Notification by certain persons of non-registration under this 
section. A person may submit a notice to the nonbank registry stating 
that it is not registering pursuant to this section because it has a 
good-faith basis to believe that it is not a covered nonbank or that an 
order in question is not a covered order. Such person shall promptly 
comply with this section upon becoming aware of facts or circumstances 
that would not permit it to continue representing that it has a good-
faith basis to believe that it is not a covered nonbank or that an 
order in question is not a covered order.


Sec.  1092.203   Optional one-time registration of NMLS-published 
covered orders.

    (a) One-time registration option with respect to an NMLS-published 
covered order. With respect to any NMLS-published covered order, a 
covered nonbank that is identified by name as a party subject to the 
order may elect to comply with the one-time registration option 
described in this section in lieu of complying with the requirements of 
Sec. Sec.  1092.202 and 1092.204.
    (b) Information to be provided. The covered nonbank, in the form 
and manner specified by the Bureau, shall provide such information that 
the Bureau determines is appropriate for the purpose of identifying the 
covered nonbank and the NMLS-published covered order, and otherwise for 
the purpose of coordinating the nonbank registry with the NMLS.
    (c) No further obligation to provide or update information with 
respect to the NMLS-published covered order. Upon providing such 
information, the covered nonbank shall have no further obligation under 
this subpart to provide information to, or update information provided 
to, the nonbank registry regarding the NMLS-published covered order.


Sec.  1092.204   Annual reporting requirements for supervised 
registered entities.

    (a) Scope of annual reporting requirements. (1) This section shall 
apply only with respect to covered orders with an effective date on or 
after the applicable nonbank registry implementation date under Sec.  
1092.206 and as to which information is provided or required to be 
provided under Sec.  1092.202.
    (2) A supervised registered entity is not required to comply with 
this section with respect to any NMLS-published covered order for which 
it chooses to comply with the one-time registration option described in 
Sec.  1092.203.
    (b) Requirement to designate attesting executive. Subject to 
paragraph (a) of this section, a supervised registered entity subject 
to a covered order shall designate as its attesting executive for the 
covered order for purposes of this subpart its highest-ranking duly 
appointed senior executive officer (or, if the supervised registered 
entity does not have any duly appointed officers, the highest-ranking 
individual charged with managerial or oversight responsibility for the 
supervised registered entity) whose assigned duties include ensuring 
the supervised registered entity's compliance with Federal consumer 
financial law, who has knowledge of the entity's systems and procedures 
for achieving compliance with the covered order, and who has control 
over the entity's efforts to comply with the covered order. The 
supervised registered entity shall annually designate one attesting 
executive for each such covered order to which it is subject and for 
all submissions and other purposes related to that covered order under 
this subpart. The supervised registered entity shall authorize the 
attesting executive to perform the duties of an attesting executive on 
behalf of the supervised registered entity with respect to the covered 
order as required in this section, including submitting the written 
statement described in paragraph (d) of this section.
    (c) Requirement to provide attesting executive(s) with access to 
documents and information. A supervised registered entity subject to 
this section shall provide its attesting executive(s) with prompt 
access to all documents and information related to the supervised 
registered entity's compliance with all applicable covered order(s) as 
necessary to make the written statement(s) required in paragraph (d) of 
this section.
    (d) Annual requirement to submit written statement to the Bureau 
for each covered order. On or before March 31 of each calendar year, 
the supervised registered entity shall, in the form and manner 
specified by the Bureau, submit to the nonbank registry a written 
statement with respect to each covered order described in paragraph 
(a)(1) of this section to which it is subject. The written statement 
shall be signed by the attesting executive on behalf of the supervised 
registered entity. In the written statement, the attesting executive 
shall:
    (1) Generally describe the steps that the attesting executive has 
undertaken to review and oversee the supervised registered entity's 
activities subject to the applicable covered order for the preceding 
calendar year; and
    (2) Attest whether, to the attesting executive's knowledge, the 
supervised registered entity during the preceding calendar year 
identified any violations or other instances of noncompliance with any 
obligations that were imposed in a public provision of the covered 
order by the applicable agency or court based on a violation of a 
covered law.
    (e) Requirement to maintain and make available related records. A 
supervised registered entity shall maintain documents and other records 
sufficient to provide reasonable support for its written statement 
under paragraph (d) of this section and to otherwise demonstrate 
compliance with the requirements of this section with respect to any 
submission under this section, for five years after such submission is 
required. The supervised registered entity shall make such documents 
and other records available to the Bureau upon request.
    (f) Notification of entity's good-faith belief that requirements do 
not apply. A person may submit a notice to the nonbank registry stating 
that it is neither designating an attesting executive nor submitting a 
written statement pursuant to this section because it has a good-faith 
basis to believe that it is not a supervised registered entity or that 
an order in question is not a covered order. Such person shall promptly 
comply with this section upon becoming aware of facts or circumstances 
that would not permit it to continue representing that it has a good-
faith basis to believe that it is not a supervised registered entity or 
that an order in question is not a covered order.


Sec.  1092.205   Publication and correction of registration 
information.

    (a) Internet publication of registration information. The Bureau 
may make available to the public the information submitted to the 
nonbank registry pursuant to Sec. Sec.  1092.202 and 1092.203 by means 
that include publishing such information on the Bureau's publicly 
available internet site within a timeframe determined by the Bureau in 
its discretion, except that:
    (1) The publication described in this paragraph (a) will not 
include the written statement submitted under Sec.  1092.204, which 
will be treated as Bureau confidential supervisory

[[Page 56154]]

information subject to the provisions of 12 CFR part 1070 of this 
chapter; and
    (2) The publication described in this paragraph (a) will not 
include administrative information.
    (b) Other publications of information. In addition to the 
publication described in paragraph (a) of this section, the Bureau may, 
at its discretion, compile and aggregate information submitted by 
persons pursuant to this subpart and make any compilations or 
aggregations of such information publicly available as the Bureau deems 
appropriate.
    (c) Correction of submissions to the nonbank registry. If any 
information submitted to the nonbank registry under this subpart was 
inaccurate when submitted and remains inaccurate, the covered nonbank 
shall file a corrected report in the form and manner specified by the 
Bureau within 30 days after the date on which such covered nonbank 
becomes aware or has reason to know of the inaccuracy. In addition, the 
Bureau may at any time and in its discretion direct a covered nonbank 
to correct errors or other non-compliant submissions to the nonbank 
registry made under this subpart.


Sec.  1092.206   Nonbank registry implementation dates.

    (a) Applicable dates. The applicable nonbank registry 
implementation date for purposes of this subpart shall be as follows:
    (1) For a covered nonbank that is a larger participant of a market 
for consumer financial products or services described under 12 U.S.C. 
5514(a)(1)(B) as defined by one or more rules issued by the Bureau, 30 
days after this subpart takes effect with respect to that covered 
nonbank;
    (2) For a covered nonbank described under any other provision of 12 
U.S.C. 5514(a)(1), 120 days after this subpart takes effect with 
respect to that covered nonbank; and
    (3) For any other covered nonbank, 210 days after this subpart 
takes effect with respect to that covered nonbank.
    (b) Calculation of dates. If paragraph (a) of this section would 
establish a nonbank registry implementation date on a date that is a 
Saturday, Sunday, or Federal holiday, the applicable nonbank registry 
implementation date will be the next day that is not a Saturday, 
Sunday, or Federal holiday.

Subpart C--[Reserved]

Appendix A to Part 1092--List of State Covered Laws

Alabama

     Ala. Code sec. 5-18A-13(j).
     Ala. Code sec. 8-19-5.

Alaska

     Alaska Stat. sec. 06.20.200.
     Alaska Stat. sec. 06.40.090.
     Alaska Stat. sec. 06.60.320.
     Alaska Stat. sec. 06.60.340.
     Alaska Stat. sec. 45.50.471.

Arizona

     Ariz. Rev. Stat. sec. 6-611.
     Ariz. Rev. Stat. sec. 6-710(8).
     Ariz. Rev. Stat. sec. 6-909(C).
     Ariz. Rev. Stat. sec. 6-947(D).
     Ariz. Rev. Stat. sec. 6-984(D).
     Ariz. Rev. Stat. sec. 6-1309(A).
     Ariz. Rev. Stat. sec. 44-1522(A).
     Ariz. Rev. Stat. sec. 44-1703(4).

Arkansas

     Ark. Code Ann. sec. 4-75-208(a).
     Ark. Code Ann. sec. 4-88-107.
     Ark. Code Ann. sec. 4-88-108(a)(1).
     Ark. Code Ann. sec. 4-88-304(a).
     Ark. Code Ann. sec. 4-90-705.
     Ark. Code Ann. sec. 4-107-203.
     Ark. Code Ann. sec. 4-112-101 to 4-112-114.
     Ark. Code Ann. sec. 4-115-102.
     Ark. Code Ann. sec. 23-39-405.

California

     Cal. Bus. & Prof. Code sec. 17200 to 17209.
     Cal. Bus. & Prof. Code sec. 17500.
     Cal. Civ. Code sec. 1770.
     Cal. Civ. Code sec. 1788.101(a), (b)(1), (7), (8), (9), 
(10).
     Cal. Fin. Code sec. 4995.3(b).
     Cal. Fin. Code sec. 22755(b), (i).
     Cal. Fin. Code sec. 90003.

Colorado

     Colo. Rev. Stat. sec. 5-3.1-121.
     Colo. Rev. Stat. sec. 5-20-109(b).
     Colo. Rev. Stat. sec. 6-1-105.

Connecticut

     Conn. Gen. Stat. sec. 36a-267.
     Conn. Gen. Stat. sec. 36a-498(g)(2).
     Conn. Gen. Stat. sec. 36a-539(d)(2), (6).
     Conn. Gen. Stat. sec. 36a-561(3), (4).
     Conn. Gen. Stat. sec. 36a-580 to 36a-589.
     Conn. Gen. Stat. sec. 36a-607(c)(2)(5).
     Conn. Gen. Stat. sec. 36a-646.
     Conn. Gen. Stat. sec. 36a-700.
     Conn. Gen. Stat. sec. 42-110b.
     Conn. Gen. Stat. sec. 42-240 to 42-253.

Delaware

     Del. Code Ann. tit. 5, sec. 2114.
     Del. Code Ann. tit. 5, sec. 2209(a)(3).
     Del. Code Ann. tit. 5, sec. 2315(a)(3).
     Del. Code Ann. tit. 5, sec. 2418(2), (9).
     Del. Code Ann. tit. 5, sec. 2904(a)(3).
     Del. Code Ann. tit. 6, sec. 2513.
     Del. Code Ann. tit. 6, sec. 2532, 2533.

District of Columbia

     D.C. Code sec. 26-1114(d)(2), (9).
     D.C. Code sec. 28-3814.
     D.C. Code sec. 28-3904.

Florida

     Fla. Stat. sec. 501.97.
     Fla. Stat. sec. 501.204.
     Fla. Stat. sec. 560.114(1)(d).
     Fla. Stat. sec. 560.309(10).
     Fla. Stat. sec. 560.406(2).
     Fla. Stat. sec. 687.141(2), (3).
     Fla. Stat. sec. 817.801 to 817.806.

Georgia

     Ga. Code Ann. sec. 7-7-2(1), (3), (4).
     Ga. Code Ann. sec. 10-1-372.
     Ga. Code Ann. sec. 10-1-393.

Hawaii

     Haw. Rev. Stat. sec. 443B-18.
     Haw. Rev. Stat. sec. 454F-17(2), (9), (14).
     Haw. Rev. Stat. sec. 477E-1 to 477E-6.
     Haw. Rev. Stat. sec. 480-2.
     Haw. Rev. Stat. sec. 480J-45(7), (10).
     Haw. Rev. Stat. sec. 481A-3.
     Haw. Rev. Stat. sec. 489D-23(2), (4).

Idaho

     Idaho Code sec. 26-31-317(2), (9).
     Idaho Code sec. 26-2505(2).
     Idaho Code sec. 28-46-413(8).
     Idaho Code sec. 48-603.
     Idaho Code sec. 48-603A.

Illinois

     815 Ill. Comp. Stat. sec. 122/4-5(3), (8).
     815 Ill. Comp. Stat. sec. 505/2 to 505/2AAAA.
     815 Ill. Comp. Stat. sec. 510/2.
     815 Ill. Comp. Stat. sec. 635/7-13(2), (9).

Indiana

     Ind. Code sec. 24-4.4-3-104.6(b), (i).
     Ind. Code sec. 24-4.5-7-410(c), (g).
     Ind. Code sec. 24-5-0.5-3.
     Ind. Code sec. 24-5-0.5-10.

Iowa

     Iowa Code sec. 535D.17(2), (9).
     Iowa Code sec. 537.3209(1).
     Iowa Code sec. 538A.3(4).
     Iowa Code sec. 714.16(2)(a).
     Iowa Code sec. 714H.3.

Kansas

     Kan. Stat. Ann. sec. 50-626.
     Kan. Stat. Ann. sec. 50-1017(2), (3).

Kentucky

     Ky. Rev. Stat. Ann. sec. 286.9-100(7).
     Ky. Rev. Stat. Ann. sec. 286.11-039(f).
     Ky. Rev. Stat. Ann. sec. 286.12-110(1)(a)(4).
     Ky. Rev. Stat. Ann. sec. 365.050.
     Ky. Rev. Stat. Ann. sec. 367.170.
     Ky. Rev. Stat. Ann. sec. 367.381(2).
     Ky. Rev. Stat. Ann. sec. 380.010 to 380.990.

Louisiana

     La. Rev. Stat. Ann. sec. 6:1055.
     La. Rev. Stat. Ann. sec. 6:1092(D)(2), (9).
     La. Rev. Stat. Ann. sec. 6:1393(A)(3)(b).
     La. Rev. Stat. Ann. sec. 6:1412(A)(2).
     La. Rev. Stat. Ann. sec. 9:3574.3(2), (3).
     La. Rev. Stat. Ann. sec. 51:1405.
     La. Rev. Stat. Ann. sec. 51:1915.

Maine

     Me. Rev. Stat. tit. 5, sec. 207.
     Me. Rev. Stat. tit. 9-A, sec. 5-118(2), (3), (4).
     Me. Rev. Stat. tit. 9-B, sec. 242.
     Me. Rev. Stat. tit. 10, sec. 1212.
     Me. Rev. Stat. tit. 32, sec. 6155(1).
     Me. Rev. Stat. tit. 32, sec. 6198(5).

[[Page 56155]]

Maryland

     Md. Code Ann., Com. Law sec. 12-1208(2).
     Md. Code Ann., Com. Law sec. 13-303.
     Md. Code Ann., Com. Law sec. 14-1302(b).
     Md. Code Ann., Com. Law sec. 14-1323.
     Md. Code Ann., Com. Law sec. 14-1914(a).
     Md. Code Ann., Com. Law sec. 14-3807.
     Md. Code Ann., Educ. sec. 26-601 to 26-604.
     Md. Code Ann., Fin. Inst. sec. 12-1001 to 12-1017.
     Md. Code Ann., Real Prop. sec. 7-501 to 7-511.

Massachusetts

     Mass. Gen. Laws ch. 93, sec. 105(d).
     Mass. Gen. Laws ch. 93A, sec. 2.
     Mass. Gen. Laws ch. 93L, sec. 8.

Michigan

     Mich. Comp. Laws sec. 445.903.
     Mich. Comp. Laws sec. 445.1823(e).

Minnesota

     Minn. Stat. sec. 58B.07(2).
     Minn. Stat. sec. 325D.09.
     Minn. Stat. sec. 325D.44.
     Minn. Stat. sec. 325F.67.
     Minn. Stat. sec. 325F.69.
     Minn. Stat. sec. 332A.02-332A.19.

Mississippi

     Miss. Code Ann. sec. 75-24-5.
     Miss. Code Ann. sec. 75-67-109.
     Miss. Code Ann. sec. 75-67-445.
     Miss. Code Ann. sec. 75-67-516.
     Miss. Code Ann. sec. 75-67-617.
     Miss. Code Ann. sec. 81-18-27(h).
     Miss. Code Ann. sec. 81-19-23(b)(i).

Missouri

     Mo. Rev. Stat. sec. 407.020.
     Mo. Rev. Stat. sec. 443.737(2), (9).

Montana

     Mont. Code Ann. sec. 30-14-103.
     Mont. Code Ann. sec. 30-14-2001 to 30-14-2015.
     Mont. Code Ann. sec. 30-14-2103(1)(f).
     Mont. Code Ann. sec. 31-1-723(5), (7), (18).
     Mont. Code Ann. sec. 31-1-724(2).
     Mont. Code Ann. sec. 32-5-309.

Nebraska

     Neb. Rev. Stat. sec. 45-804(5).
     Neb. Rev. Stat. sec. 45-812.
     Neb. Rev. Stat. sec. 45-919(1)(j).
     Neb. Rev. Stat. sec. 59-1602.
     Neb. Rev. Stat. sec. 87-302.

Nevada

     Nev. Rev. Stat. sec. 598.746(5).
     Nev. Rev. Stat. sec. 598.787.
     Nev. Rev. Stat. sec. 598.0915 to 598.0925.
     Nev. Rev. Stat. sec. 604A.5021(5), (6).
     Nev. Rev. Stat. sec. 604A.5049(5), (6).
     Nev. Rev. Stat. sec. 604A.5072(5), (6).
     Nev. Rev. Stat. sec. 604A.582.
     Nev. Rev. Stat. sec. 604A.592.
     Nev. Rev. Stat. sec. 675.280.

New Hampshire

     N.H. Rev. Stat. Ann. sec. 358-A:2.
     N.H. Rev. Stat. Ann. sec. 383:10-h.
     N.H. Rev. Stat. Ann. sec. 397-A:14(g), (n).
     N.H. Rev. Stat. Ann. sec. 399-A:14(I).
     N.H. Rev. Stat. Ann. sec. 399-F:4(III).

New Jersey

     N.J. Stat. Ann. sec. 17:11C-41(g).
     N.J. Stat. Ann. sec. 17:16F-39(b).
     N.J. Stat. Ann. sec. 17:16ZZ-9(b).
     N.J. Stat. Ann. sec. 56:8-2.

New Mexico

     N.M. Stat. Ann. sec. 57-12-3.
     N.M. Stat. Ann. sec. 58-7-8(C).
     N.M. Stat. Ann. sec. 58-15-3(G).
     N.M. Stat. Ann. sec. 58-21-21.
     N.M. Stat. Ann. sec. 58-21A-12.
     N.M. Stat. Ann. sec. 58-21B-13(C)(2), (9).

New York

     N.Y. Banking Law sec. 719(2), (9).
     N.Y. Exec. Law sec. 63(12).
     N.Y. Fin. Serv. sec. 702(i).
     N.Y. Gen. Bus. Law sec. 349.
     N.Y. Gen. Bus. Law sec. 458-e.
     N.Y. Gen. Bus. Law sec. 458-h.
     N.Y. Gen. Bus. Law sec. 521-d.
     N.Y. Gen. Bus. Law sec. 741.
     N.Y. Real Prop. Law sec. 280-b(2).

North Carolina

     N.C. Gen. Stat. sec. 25A-44(4).
     N.C. Gen. Stat. sec. 53-180(g).
     N.C. Gen. Stat. sec. 53-270(4).
     N.C. Gen. Stat. sec. 66-106 to 66-112.
     N.C. Gen. Stat. sec. 75-1.1.
     N.C. Gen. Stat. sec. 75-121.
     N.C. Gen. Stat. sec. 75-122.

North Dakota

     N.D. Cent. Code sec. 13-04.1-09(4), (10).
     N.D. Cent. Code sec. 13-08-12(9).
     N.D. Cent. Code sec. 13-10-17(2).
     N.D. Cent. Code sec. 13-11-23(1)(p).
     N.D. Cent. Code sec. 51-15-02.
     N.D. Cent. Code sec. 51-15-02.3.

Ohio

     Ohio Rev. Code Ann. sec. 1321.11.
     Ohio Rev. Code Ann. sec. 1321.41(N).
     Ohio Rev. Code Ann. sec. 1321.44.
     Ohio Rev. Code Ann. sec. 1321.60(A).
     Ohio Rev. Code Ann. sec. 1321.651(B).
     Ohio Rev. Code Ann. sec. 1322.40(I).
     Ohio Rev. Code Ann. sec. 1345.02.
     Ohio Rev. Code Ann. sec. 1345.21 to 1345.28.
     Ohio Rev. Code Ann. sec. 4165.02.
     Ohio Rev. Code Ann. sec. 4710.02(F)(1).
     Ohio Rev. Code Ann. sec. 4710.04.

Oklahoma

     Okla. Stat. Ann. tit. 15, sec. 753(21), (29).
     Okla. Stat. Ann. tit. 59, sec. 2095.18(2), (9).
     Okla. Stat. Ann. tit. 59, sec. 3111.
     Okla. Stat. Ann. tit. 78, sec. 53.

Oregon

     Or. Rev. Stat. sec. 86A.163.
     Or. Rev. Stat. sec. 86A.236(3), (5), (13).
     Or. Rev. Stat. sec. 646.607.
     Or. Rev. Stat. sec. 646.608(1)(d), (u).
     Or. Rev. Stat. sec. 646A.720(10).
     Or. Rev. Stat. sec. 725.060.
     Or. Rev. Stat. sec. 725A.058.

Pennsylvania

     7 PA. Cons. Stat. sec. 6123(a)(3).
     18 PA. Cons. Stat. sec. 7311(b.1).
     73 PA. Cons. Stat. sec. 201-3.
     73 PA. Cons. Stat. sec. 2183(4).
     73 PA. Cons. Stat. sec. 2188(c)(2).
     73 PA. Cons. Stat. sec. 2270.4.
     73 PA. Cons. Stat. sec. 2270.5.
     73 PA. Cons. Stat. sec. 2501 to 2511.

Rhode Island

     R.I. Gen. Laws sec. 5-80-8(5).
     R.I. Gen. Laws sec. 6-13.1-2.
     R.I. Gen. Laws sec. 6-13.1-21 to 6-13.1-23.
     R.I. Gen. Laws sec. 6-13.1-25.
     R.I. Gen. Laws sec. 6-13.1-30.
     R.I. Gen. Laws sec. 19-14-21(a).
     R.I. Gen. Laws sec. 19-14.3-3.8(8), (9).
     R.I. Gen. Laws sec. 19-14.8-28(a)(16).
     R.I. Gen. Laws sec. 19-14.10-17(2), (9).
     R.I. Gen. Laws sec. 19-14.11-4(2).
     R.I. Gen. Laws sec. 19-33-12(2).

South Carolina

     S.C. Code Ann. sec. 34-29-120.
     S.C. Code Ann. sec. 34-36-10 to 34-36-80.
     S.C. Code Ann. sec. 34-39-200(3), (5).
     S.C. Code Ann. sec. 34-41-80(3), (5).
     S.C. Code Ann. sec. 37-2-304(1).
     S.C. Code Ann. sec. 37-3-304(1).
     S.C. Code Ann. sec. 37-6-118.
     S.C. Code Ann. sec. 37-7-101 to 37-7-122.
     S.C. Code Ann. sec. 39-5-20.

South Dakota

     S.D. Codified Laws sec. 37-24-6.
     S.D. Codified Laws sec. 37-25A-43.
     S.D. Codified Laws sec. 54-4-63.

Tennessee

     Tenn. Code Ann. sec. 45-13-401(8).
     Tenn. Code Ann. sec. 45-17-112(k).
     Tenn. Code Ann. sec. 45-18-121(g).
     Tenn. Code Ann. sec. 47-16-101 to 47-16-110.
     Tenn. Code Ann. sec. 47-18-104.
     Tenn. Code Ann. sec. 47-18-120.
     Tenn. Code Ann. sec. 47-18-1003(4).
     Tenn. Code Ann. sec. 47-18-5402(a)(1).

Texas

     Tex. Bus. & Com. Code Ann. sec. 17.46.
     Tex. Bus. & Com. Code Ann. sec. 17.50.
     Tex. Bus. & Com. Code Ann. sec. 17.501.
     Tex. Fin. Code Ann. sec. 180.153(2), (11).
     Tex. Fin. Code Ann. sec. 308.002.
     Tex. Fin. Code Ann. sec. 341.403.
     Tex. Fin. Code Ann. sec. 392.303 to 392.304.
     Tex. Fin. Code Ann. sec. 393.305.
     Tex. Fin. Code Ann. sec. 394.207.
     Tex. Fin. Code Ann. sec. 394.212(a)(9).

Utah

     Utah Code Ann. sec. 13-11-4.
     Utah Code Ann. sec. 13-11-4.1.
     Utah Code Ann. sec. 13-11a-4.
     Utah Code Ann. sec. 13-21-3(1)(g).

Vermont

     Vt. Stat. Ann. tit. 8, sec. 2121.

[[Page 56156]]

     Vt. Stat. Ann. tit. 8, sec. 2241(2), (9).
     Vt. Stat. Ann. tit. 8, sec. 2251 to 2260.
     Vt. Stat. Ann. tit. 8, sec. 2760b(b).
     Vt. Stat. Ann. tit. 8, sec. 2922.
     Vt. Stat. Ann. tit. 9, sec. 2453.
     Vt. Stat. Ann. tit. 9, sec. 2481w(b), (c), (d).

Virginia

     Va. Code. Ann. sec. 6.2-1524(B).
     Va. Code. Ann. sec. 6.2-1614(8)(a).
     Va. Code. Ann. sec. 6.2-1629(A).
     Va. Code. Ann. sec. 6.2-1715(A)(1).
     Va. Code. Ann. sec. 6.2-1816(26).
     Va. Code. Ann. sec. 6.2-1819(A).
     Va. Code. Ann. sec. 6.2-2017.
     Va. Code. Ann. sec. 6.2-2107(3), (4).
     Va. Code. Ann. sec. 6.2-2610(A)(2), (C).
     Va. Code. Ann. sec. 59.1-200(A).
     Va. Code. Ann. sec. 59.1-335.5(4).

Washington

     Wash. Rev. Code sec. 18.28.120(6).
     Wash. Rev. Code sec. 18.44.301(2), (4).
     Wash. Rev. Code sec. 19.16.110.
     Wash. Rev. Code sec. 19.16.250.
     Wash. Rev. Code sec. 19.16.260.
     Wash. Rev. Code sec. 19.16.440.
     Wash. Rev. Code sec. 19.86.020.
     Wash. Rev. Code sec. 19.134.020(1)(e).
     Wash. Rev. Code sec. 19.146.0201(2), (7).
     Wash. Rev. Code sec. 19.144.080(1)(a)(ii).
     Wash. Rev. Code sec. 19.146.100.
     Wash. Rev. Code sec. 19.230.340(2), (4).
     Wash. Rev. Code sec. 19.265.050(3).
     Wash. Rev. Code sec. 31.04.027.
     Wash. Rev. Code sec. 31.45.105(1)(a), (b).

West Virginia

     W. Va. Code sec. 31-17-10.
     W. Va. Code sec. 31-17A-16(2), (9).
     W. Va. Code sec. 32A-2-26.
     W. Va. Code sec. 46A-6-104.
     W. Va. Code sec. 46A-6C-3(4).

Wisconsin

     Wis. Stat. sec. 100.18.
     Wis. Stat. sec. 100.20.
     Wis. Stat. sec. 100.55(3).
     Wis. Stat. sec. 138.14(12)(e).
     Wis. Stat. sec. 224.77(1)(b), (c).
     Wis. Stat. sec. 422.503(c).
     Wis. Stat. sec. 423.301.
     Wis. Stat. sec. 427.104(1)(m).

Wyoming

     Wyo. Stat. Ann. sec. 40-12-105.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2024-12689 Filed 7-5-24; 8:45 am]
BILLING CODE 4810-AM-P