Washington State DFI Releases 3 DCU Bulletins Affecting State Chartered CUs

The Washington State Department of Financial Institutions (DFI) recently released several DCU Bulletins that credit unions should be aware of.

DCU Bulletin B-16-13MBL Rulemaking Suspended, informs Washington State credit unions that the member business loan rule-making has been temporarily suspended in light of the ICBA’s complaint that was filed against the National Credit Union Administration. The DFI and credit unions will continue to analyze the lawsuit and its implications for Washington State.

DCU Bulletin B-16-14Electronic Payment System Exams, informs Washington State credit unions will be adding reviews of Electronic Payments Systems (EPS) to the safety and soundness examinations.  EPS exams will be implemented in the first quarter of 2017.  In 2017, the EPS exams on Washington State chartered credit unions with over $250 million in total assets.  The EPS exams will typically last no longer than three days onsite.  A separate EPS rating will not be given, although the “Management” component rating of CAMELS could be adjusted up or down based on the EPS examination.

Division EPS examiners will focus their reviews on the following:

  • EPS risk assessments;
  • EPS audits (both external and internal);
  • EPS policy and procedures; and
  • EPS limits and controls that are in place.

Additionally, examiners will focus on new EPS services and the credit unions’ internal controls, limits and processes in place to minimize and reduce risks.

Examiners will use the following existing AIRES questionnaires pertaining to electronic payment systems;

  • IC – ACH General;
  • IC – Payment Systems – FRB;
  • IC – Wire Transfers;
  • IC – ATM;
  • Remote Deposit Capture Procedures;
  • IC – ACH RDFI;
  • IC – ACH ODFI (moderate risk), and
  • IC – ACH ODFI (high risk).

DCU Bulletin B-16-16Practice of Using Power of Attorney for Vehicle Loans, informs Washington State Credit unions that the Washington Department of Licensing (DOL) will not accept powers of attorney executed by a credit union employee on behalf of a member.  The DOL will require a separate power of attorney signed by the member, not one that is signed by an employee of the credit union.

In early August 2016, the DOL investigated a credit union’s practice of executing a power of attorney form signed by a credit union employee to transfer the credit union’s interest in a vehicle.  In this case, the member signs a consumer loan agreement which contained the following POA authorization:

Additional Documents and Power of Attorney. You agree to sign any other documents, such as financing statements, applications for certificates of title, and certificates of title, to perfect our security interest. You agree to give us an irrevocable power of attorney to sign your name to title certificate(s) and to apply in your name for the issuance of a certificate or title to any motor vehicle you have given as collateral. To the extent permitted by applicable law, you agree we may endorse any check payable to you, if you refuse, you waive protest of such action.

Credit unions should review their vehicle lending and title transfer practices.  Even if the loan document includes language that actually grants a POA, credit union should have the member sign a separate POA form authorizing the credit union to sign other documents on behalf of the member.

Compliance Question of the Week

If a member wants their share draft account and savings accounts linked to avoid overdrafts, is the savings account considered a transaction account under Regulation D?

Not automatically. A savings account must generally be subject to the six transaction limit to avoid being counted as a transaction account under Reg. D. However, if the transfer from the savings account is used to repay a debt to the credit union, the transfer may be an exception to the six transaction rule. Therefore, the total number of actual transactions may be even more than six without counting as a transaction account under Reg. D.


12 CFR 204.2

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA reported that the Corporate Resolution Program continues to be in good standing.

The NCUA announced that it has made modifications to the Call Report that will make reporting simpler. The September 30th Call Report will require less information from credit unions about CUSOs, as this information should now be reported through the CUSO Registry.

Consumer Protection Financial Bureau (CFPB)

The CFPB announced the release of a new fraud placement that is aimed at alerting potential victims of the signs of mail fraud.

CFPB Director Richard Cordray delivered prepared remarks to NAFCU. Cordray’s comments included mortgage industry performance and what the CFPB has done to try to alleviate the regulatory burden facing smaller institutions.

Federal Reserve Board (FRB)

The FRB released the minutes from its most recent Federal Open Market Committee. The minute’s state that the committee decided to maintain the target range for the federal funds rate.

The FRB issued a notice of proposed rulemaking that outlines risk-based capital and other regulatory requirements for activities of financial holding companies.

The minutes from the most recent FRB Federal Advisory Council have been released.

U.S. Department of the Treasury (Treasury)

Treasury Secretary Jack Lew delivered testimony on the 2016 annual report of the Financial Stability Oversight Council to the House Financial Services Committee. Lew discussed the areas of focus of the 2016 report which included cybersecurity, asset management risks, capital, liquidity and resolution, and interest rate risk.

Financial Action Task Force (FATF)

FATF announced the opening of its Training and Research Institute which will provide training to government officials from all member countries of the FATF.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of September 23, 2016. The last update prior to this was September 20, 2016.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance News, Economy, Federal, NCUA.