CUNA Regulatory Advocacy Report

CUNA Regulatory Advocacy Report: January 24, 2013

Good afternoon. Here is this week’s CUNA Regulatory Advocacy report.

  • CFPB Officially Delays International Remittance Regulation
  • FFIEC Releases Social Media Guidance to Financial Institutions with Request for Comment
  • IRS Issues Final FATCA Regulation
  • Credit Union Mergers: Thresholds for Government Review Increased
  • GAO Issues Report on Financial Regulators’ Progress in Implementing Regulations Mandated by Dodd-Frank
  • CUNA Chart of Current CFPB Rulemakings: Current as of 1/24/2013

CFPB Officially Delays International Remittance Regulation

This week the Consumer Financial Protection Bureau (CFPB) officially announced in a blog post that it is delaying the effective date of its international remittance transfer rule that was set to go into effect on February 7, 2013. The new effective date will be announced “later this year” and the new effective date will be “determined when the substantive refinements to the December 2012 Proposal are finalized.”

CUNA, leagues, and credit unions continue to advocate to the CFPB that the agency should provide more meaningful compliance relief for credit unions, and the agency should postpone the effective date of the final rule for at least 12 months from the finalization of the December 2012 proposed rule.

We appreciate the feedback and survey submissions we have received from credit unions and leagues regarding impact from the remittance rule. We will be sending another comment letter to the CFPB by January 30 regarding the December 2012 proposed rule that would provide more flexibility to remittance providers regarding the disclosure of foreign taxes and fees imposed by the recipient institution, as well as revise the error resolution provisions that apply when a remittance transfer is not properly delivered based on an incorrect account number provided by the consumer-sender.

FFIEC Releases Social Media Guidance to Financial Institutions with Request for Comment

The Federal Financial Institutions Examination Council (FFIEC) released proposed guidance entitled “Social Media: Consumer Compliance Risk Management Guidance. The Guidance addresses the applicability of federal consumer protection and compliance laws, regulations, and policies to activities conducted via social media by credit unions and other regulated financial institutions. The proposed Guidance does not impose new requirements on credit unions. Its purpose is to help financial institutions “understand potential consumer compliance and legal risks, as well as related risks, such as reputation and operation risks associated with the use of social media, along with the expectation for managing those risks.” CUNA is working on a Comment Call summarizing the proposed Guidance.

IRS Issues Final FATCA Regulation

The Internal Revenue Service (IRS) issued a final rule that implements information reporting and withholding tax provisions under the Foreign Account Tax Compliance Act (FATCA). The rule describes the step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents.

As noted in a summary developed by the World Council of Credit Unions (WOCCU), FATCA purports to apply to non-U.S. credit unions as well as to U.S. credit unions that make overseas transfers of untaxed proceeds from U.S. sourced interest and investment income. U.S. credit unions will be required eventually to perform due diligence and tax withholding regarding overseas payments of not-yet-taxed U.S. sourced “passive” interest and investment income. Specifically, U.S. credit unions beginning January 1, 2017 will be required to withhold 30% of payments of not-yet-taxed U.S. investment or interest income being routed to accounts at FFIs that are not FATCA compliant (this is a significant change from the proposed rule that would have begun FATCA withholding in 2014). In addition, U.S. credit unions will likely need to perform a due diligence review of existing accounts—to determine if the credit union holds accounts for FFIs that are not FATCA compliant—by December 31, 2015, although few, if any, U.S. natural-person credit unions are likely to have such FFI accounts, according to the summary.

The IRS’s final FATCA regulation makes many changes from the agency’s proposed regulation that will help limit FATCA’s regulatory burdens on both U.S. and non-U.S. credit unions. While the long postponement in most of the compliance burden is certainly a positive reflection of our advocacy efforts (click here for CUNA’s comment letter), we will continue pushing the IRS on issues that still need to be improved.

Credit Union Mergers: Thresholds for Government Review Increased

On January 10, the Federal Trade Commission (FTC) announced the annual revisions to the Hart-Scott-Rodino Act (HSR) filing thresholds for credit unions. The updated thresholds are $70.9 million and become effective on February 11, 2013. HSR requires some merging credit unions to submit prior notification of a merger to the FTC if the merging credit union’s assets on its latest call report are equal to or greater than the $70.9 million threshold.

GAO Issues Report on Financial Regulators’ Progress in Implementing Regulations Mandated by Dodd-Frank

According to a Government Accountability Office (GAO) report released this week, although regulators have made progress in implementing some key reforms required by the Dodd-Frank Act, others remain incomplete, and the effectiveness of some implemented reforms remains to be seen. The report examines the (1) overall status of U.S. financial regulatory reforms arising from the Act, (2) challenges affecting the implementation of these reforms, and (3) areas that pose continued risk.

While the report does not specifically address the efforts of NCUA, it does touch on the progress of the Financial Stability Oversight Council (FSOC), of which NCUA is a member. FSOC was established to identify systemic threats, and as noted in the report, has taken steps to carry out its responsibilities. “Regulators have taken actions to implement some key reforms intended to reduce systemic risk. For example, FSOC developed—and is currently implementing—a process and criteria to determine whether certain nonbank financial institutions should be designated for supervision. But, to date, no such designations have been made,” according to the report.

Overall, GAO identified 236 provisions of the Dodd-Frank Act that require regulators to issue rulemakings across nine key areas. As of December 2012, of these 236 provisions, regulators had: (1) issued final rules for 48%; (2) proposed rules for 29%; (3) and not begun the rulemaking process for 23%.

CUNA Chart of Current CFPB Rulemakings: Current as of 1/24/2013

Click here for a current chart of the CFPB’s proposed and final rules.


Thanks for your support and positive feedback on our reports. For any questions about this week’s report, please feel free to contact Eric Richard or me.

Mary Mitchell Dunn
Senior Vice President and Deputy General Counsel

Posted in Around the NW, Marketing & Communications.