CFPB Policy Statement on ‘Compliance Aids’

Credit unions can use these compliance resources to stay up to date on existing rules and statutes.

2/4/2020

Hand holding the word "compliance."

The CFPB has published [85 FR 4579], a policy statement announcing a new designation for certain Bureau guidance, known as “Compliance Aids,” to explain the legal status and role of guidance with that designation. The designation was applicable beginning Feb. 1.

Compliance aids will be similar to previous compliance resources from the Bureau, but will be designated officially as “Compliance Aids.” Some current compliance resources may be so designated when they are updated or reissued.

They are not to be considered “rules” under the Administrative Procedures Act. Instead, Compliance Aids present the requirements of existing rules and statutes in a manner that is useful for compliance professionals, other industry stakeholders, and the public. Compliance Aids may also include practical suggestions for how entities might choose to go about complying with those rules and statutes. But they may not address all situations.

Where there are multiple methods of compliance that are permitted by the applicable rules and statutes, an entity can make its own business decision regarding which method to use, and this may include a method that is not specifically addressed in a Compliance Aid. Regulated entities are not required to comply with the Compliance Aids themselves. Regulated entities are only required to comply with the underlying rules and statutes.

When exercising its enforcement and supervisory discretion, the Bureau does not intend to sanction, or ask a court to sanction, entities that reasonably rely on Compliance Aids.

Question of the Week

Q. What are the record retention requirements for member account statements? Must they be kept permanently?

A. According to the NCUA, yes. Financial institutions that fall under different federal regulations might have different retention requirements, so credit unions should pay careful attention to the guidelines issued by the NCUA.

The NCUA’s regulations provide for two classes of records that should be retained permanently: official records and key operational records. The records are defined as follows:

  1. Official records of the credit union that should be retained permanently are:
    • Charter, bylaws, and amendments.
    • Certificates or licenses to operate under programs of various government agencies, such as a certificate to act as issuing agent for the sale of U.S. savings bonds.
  2. Key operational records that should be retained permanently are:
    • Minutes of meetings of the membership, board of directors, credit committee, and supervisory committee.
    • One copy of each financial report, NCUA Form 5300 or 5310, or their equivalent, and the Credit Union Profile report, NCUA Form 4501, or its equivalent as submitted to the NCUA at the end of each quarter.
    • One copy of each supervisory committee comprehensive annual audit report and attachments.
    • Supervisory committee records of account verification.
    • Applications for membership and joint share account agreements.
    • Journal and cash record.
    • General ledger.
    • Copies of the periodic statements of members, or the individual share and loan ledger. (A complete record of the account should be kept permanently.)
    • Bank reconcilement.
    • Listing of records destroyed.

While this is a lot of documentation to retain permanently, the NCUA doesn’t require a specific method of retention. This means that these documents can be stored electronically.

Related Links

Appendix A to Part 749

Legal Briefs

National Credit Union Administration (NCUA)

Subordinate Debt
The NCUA issued a proposed rule to allow eligible credit unions to issue subordinated debt for regulatory capital standards. The rule would amend parts of the NCUA’s regulations to update the authority low-income-designated credit unions have to issue subordinated debt. The rule also would authorize complex credit unions subject to the NCUA’s risk-based capital requirements and new credit unions to use subordinated debt under certain circumstances.

Combination Transactions with Non-Credit Unions
The NCUA issued a proposed rule to provide greater clarity about the process for credit unions interested in merging with or assuming liabilities of financial institutions that are not credit unions.

CFPB Announces 2020 Reg Z Asset-Size Threshold Exemptions
The NCUA released a reminder to credit unions that the CFPB released asset-size threshold adjustments for the HMPL escrow requirement.

HMDA Data Collection Requirements for 2020
The NCUA released a reminder of the HMDA criteria under which credit unions would be required to gather and report HMDA data for 2020.

Submission of 2019 HMDA data
The NCUA released a reminder regarding the 2019 HMDA data submission.

Consumer Financial Protection Bureau (CFPB)

Policy Regarding Prohibition on Abusive Acts or Practices
The CFPB issued a policy statement providing insight on how the Bureau intends to apply the “abusiveness” standard in supervision and enforcement matters.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of Jan 31. The last update prior to this was Jan. 23.

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