NCUA Releases Examination Focus for 2017

Also, this week’s legal briefs, and answering what do when an account has two POD beneficiaries, but one beneficiary is deceased.

The National Credit Union Administration (NCUA) release Letter to Credit Unions 17-CU-01 which covers the Administrations supervisory focus for 2017.  The letter is intended to assist credit unions in preparing for their upcoming examinations.

In general, the examinations in 2017 will focus on the following:

Cybersecurity

For the third year in a row, cybersecurity is the top supervisory focus.  The NCUA will continue to evaluate each credit union’s cybersecurity risk management policies.  The NCUA encourages credit unions to use the FFIEC Cybersecurity Assessment Tool as a way to and bolster the credit union’s security and risk management processes.  For more cybersecurity resources, NWCUA member credit unions can visit the NWCUA Cybersecurity Resource Center.

BSA Compliance

The NCUA will review credit unions for compliance with the Bank Secrecy Act and the related examination questionnaire.  In addition, the NCUA will focus on credit unions with relationships to money service businesses (MSBs) and other accounts that may pose a higher risk for money laundering.  Credit unions that provide services for MSBs, MRBs, or other types of high-risk businesses need specialized procedures in place to appropriately classify risk and determine the depth and intensity of monitoring that is necessary.

Internal Controls/Fraud Prevention

The NCUA will evaluate the adequacy of a credit union’s internal controls, as well as overall efforts to prevent and control fraud.  The letter highlights that credit unions with limited staff may have inherent challenges in maintaining adequate separation of duties.

Interest Rate and Liquidity Risk

Additional items that have been of NCUA supervisory focus for the last several years.  NCUA field staff will begin using the revised IRR supervisory tool and new examination procedures to assess interest rate risk management practices in credit unions.  The NCUA will also focus on the relationship between IRR and liquidity risk.

Commercial Lending

NCUA field staff will evaluate a credit union’s commercial loan policies and procedures and assess the risk management processes associated with managing a commercial loan portfolio. Credit union officials should be prepared to provide documentation to support management’s ability to effectively monitor and manage its commercial loan portfolio.

Consumer Compliance

The letter to credit unions highlights that examiners will begin evaluating credit unions compliance with the Military Lending Act requirements that had the mandatory compliance date of October 3, 2016.  Per Letter to Credit Unions 16-CU-07 these first examinations will focus on:

  • Ensuring that a credit union is aware of amendments to the rule and determining the applicability of the amendments;
  • Ensuring that a credit union is making progress in complying with the rule, if applicable; and
  • Assessing the quality of a credit union’s compliance risk management systems and its policies and procedures for implementing the program.

Compliance Question of the Week

We have an account that has two POD beneficiaries listed. The member has passed away and shortly after his passing, one of the beneficiaries also passed away. Does the remaining beneficiary receive all of the funds from the account?

No. If both beneficiaries survived your member’s passing, then the estate of the deceased beneficiary is entitled to 50% of the funds in the account, unless the contract expressly lists a different amount.

You would need to determine when the beneficiary passed away and request a copy of the death certificate.

Related Links:

RCW 30A.22.100

ORS 723.490

IDS 15-6-110

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA announced that it will be hosting a webinar on Wednesday, February 1, 2017 to cover the new field-of-membership rule. Credit unions can register for the webinar here.

The video of the NCUA’s December 2016 board meeting is now available.

The NCUA issued Letter to Credit Unions 17-CU-01, detailing their supervisory priorities for 2017.

Consumer Financial Protection Bureau (CFPB)

CFPB Director Cordray delivered prepared remarks at the CFPB’s Debt Collection Event. Cordray’s remarks focused on the various ways that debt collectors adversely impact consumers as well as the steps that the CFPB has taken to help consumers in this area.

The CFPB released a survey titled “The Consumer Experiences with Debt Collectors” that highlights the concerns found in the debt collection market.

Federal Reserve Board (FRB)

The FRB released the minutes of its interest rate meetings from November 14 through December 14, 2016.

The FRB posted its peak and average daylight overdraft and related fees reports.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of January 12, 2017. The last update prior to this was January 11, 2017.

Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].