Compliance Update with Amy K

​Is your credit union up to date with CU PolicyPro and InfoSight content? Plus NCUA letter on due diligence; a CFPB privacy advisory, and more. 

by Amy Kleinschmit, Chief Compliance Officer

CU Policy Pro Updates
CU PolicyPro has announced updates to the policy manual. Many of the changes within this update are associated with moving content from the policy to a third level of content underneath the supporting policy as a corresponding procedure/resource. 

Beginning with Chapter 1000: Administration, this chapter was reviewed to determine if the model content was truly policy-related or if the content more procedural/resource information that was better suited to support overarching policy content. In total, 16 sections that were previously identified as “policies” have been recategorized as “procedures” or “resources” and moved as a sub-section under a related policy. The majority of these sections were moved under Policies 1100 (Credit Union Culture and Governance), 1230 (Regulatory Compliance) and 1500 (Staffing and Human Resources).

Policy 7450 - Bank Secrecy Act – Marijuana-Related Business Lending, is a new policy for credit unions with offering this product.

Policy 1520 – Succession Planning was revised based on the proposed rule by NCUA. While there will likely be additional changes to consider when a final rule is issued, the proposed rule was used as a framework to update the existing policy in the interim.

Policy 2611 – ACH Operations and Management. This policy was revised to combine the ACH Operations (Policy 2610) and ACH Management (Policy 2611) and additional minor changes were made. The changes were so extensive that a redlined version is not available. It is recommended to adopt this current version in its entirety, then re-customizing if needed.

Policy 7120 – Fair Lending. This policy was reviewed in light of the CFPB’s advisory opinion on the impact of the Equal Credit Opportunity Act through the lending process, including after credit has been extended.  Minor revisions were made to clearly acknowledge the credit union’s compliance.  In addition, content within Policy 9110 – Regulation B – Equal Credit Opportunity Act was included.

Policy 7351 – Small Creditor Ability to Repay. This policy was revised to include the option for small creditors who are originating first lien higher-priced mortgage loans to take advantage of the seasoned qualified mortgage option.
Six policies had redundant information already found in another policy. The content of these policies was consolidated with other policies as needed, then was archived and removed from CU PolicyPro. It was felt these changes were necessary as CU policy pro works to make their content more concise and easier to access.
You can review all updates and changes in the “Summary of Content Changes 2022.2 Update – June 2022” which can be found under “Resources” then “Content Update Archives” of your credit union’s CU Policy Pro manual.
 
InfoSight Content Update
Q2 Compliance Update is available and can be viewed now within InfoSight. This update reviews deposit account updates, lending updates and credit union operations updates.

US Savings Bonds information can be found under the “Accounts” channel of Infosight. A recent RISK Alert from CUNA Mutual Group discusses scams involving the redemption of US Savings Bonds and includes information about validating bonds presented for cashing. 

The US Savings Bond topic includes several helpful FAQs for additional information including the FAQ - Is there a way to VALIDATE a bond to make sure it's legitimate?

Yes!  Although the TreasuryDirect tool calculates the value, it does NOT:

• verify whether the member owns the savings bonds;
• guarantee the serial number you entered is valid;
• guarantee a savings bond is eligible to be cashed; or 
• create a savings bond based on information that is entered into this tool.

Credit unions should use the Savings Bond Valuation and Verification for Financial Institutions from the U.S. Department of the Treasury’s Bureau of the Fiscal Service to validate savings bond. In order to obtain access, credit unions will need to email sbvv@fiscal.treasury.gov. Once you have access, it appears very easy to use by following the instructions on how to use this tool.
 
NCUA Letter 22-CU-08
The National Credit Union Administration (NCUA) recently issued Letter to Credit Unions 22-CU-08 regarding risk based approach to assessing customer relationships and conducting customer due diligence.

The Letter included a joint statement from the NCUA along with four other regulatory agencies, which reiterates, “the Agencies are reinforcing a longstanding position that no customer type presents a single level of uniform risk or a particular risk profile related to money laundering, terrorist financing, or other illicit financial activity.”

It reminds credit unions of the requirements to adopt appropriate risk-based procedures for conducting ongoing CDD that, among other things, enable credit unions to: (i) understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile, and (ii) conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.

As stated in the letter to credit unions, “the NCUA expects credit unions to assess the risks posed by each customer individually. Further, the NCUA advises against refusing service or discontinuing service to an entire class of customers based on perceived risk. Credit unions that comply with BSA and anti-money laundering (AML) requirements and have an effective customer due diligence program in place are well-positioned to manage customer relationships and risks appropriately, based on each individual customer relationship.”
 
CFPB – Advisory to Protect Privacy When Companies Compile Personal Data
The Consumer Financial Protection Bureau (CFPB) recently issued an Advisory Opinion regarding the Fair Credit Reporting Act (FCRA). The FCRA protects consumer privacy in multiple ways, including by limiting the circumstances under which consumer reporting agencies may disclose consumer information.
As noted by the CFPB, “in light of the importance of the FCRA’s permissible purpose provisions to the protection of consumer privacy, the Bureau is issuing this advisory opinion to affirm that consumer reporting agencies may not provide a consumer report pursuant to FCRA section 604(a) under any circumstance not expressly permitted by this section.”

The Bureau interprets FCRA section 604(f) to provide that consumer report users are strictly prohibited from using or obtaining consumer reports without a permissible purpose.

 Credit unions should review the permissible purposes to obtain and use a credit report to ensure compliance. CU Policy pro has model policy 11001 which details the permissible purposes along with other regulatory requirements under FCRA.

As always, DakCU members may contact Amy Kleinschmit with any compliance related questions. 

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