Compliance Update with Amy K

by Amy Kleinschmit, Chief Compliance Officer 

​NCUA to lay out priorities in webinar next week. Plus a FinCEN advisory on COVID related fraud, PPP frequently asked questions, and Hemp is a new supervisory priority. 

NCUA Webinar – Chairman’s Priorities
The National Credit Union Administration will hold a webinar on Thursday, February 11, that will provide participants with an update on Chairman Todd M. Harper’s priorities, the agency’s supervisory activities, and recently issued guidance and regulations, among other topics.

Registration for the “NCUA Chairman’s” webinar is now open. The webinar will begin at 1 p.m. (CT) and run for approximately 90 minutes. Questions can be submitted anytime during the presentation or in advance by emailing [email protected]. The email’s subject line should read, “NCUA Chairman’s Webinar.”
 
FinCEN Advisory
The Financial Crimes Enforcement Network (FinCEN) recently issued advisory FIN-2021-A001 on COVID-19 Health Insurance and Health Care related fraud. This advisory contains descriptions of COVID-19-related fraud involving health care benefit programs and health insurance, associated financial red flag indicators, select case studies, and information on reporting suspicious activity.

Areas of fraud discussed in the advisories include unnecessary services; billing schemes; kickbacks; health care technology schemes; telefraud and telehealth schemes; fraudulently obtaining COVID-19 health care relief funds; and identity theft leading to additional fraud.

Examples of potential red flags include:

• An account with no previous known association with providing health care services, receives an unexpected or excessive COVID-19-related payment that appears to be the CARES Act’s Provider Relief Fund or the PPP-HCEA payments. Shortly after the account receives the deposit, an individual(s) withdraws the funds via large cash withdrawals, cashier’s checks, wires to an overseas account, transfers to personal accounts, or payments for non-business expenses.
• An account holder receives a substantial amount of reimbursements from health care benefit programs or health insurance companies for services rendered at the same time that the account holder receives COVID-19-related unemployment insurance payments.

The advisory instructs financial institutions to include the key term “FIN-2021-A001” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative portion of the SAR to indicate a connection between the suspicious activity being reported and the activities highlighted in this advisory. Additionally, select SAR field 34(g) (health care – public or private health insurance) as the associated suspicious activity type to indicate a connection between the suspicious activity being reported and COVID-19. Financial institutions should include additional detail about the type of health care fraud (e.g., Medicare – services not provided) in the narrative.
 
FinCEN – PPP FAQs
FinCEN also recently issued four FAQs relating to the Paycheck Protection Program (PPP) which can be found here. These FAQs originally appeared in the Small Business Administration’s FAQs for implementation of the PPP. However, as explained in the FinCEN release, “As the administrator of the BSA, the Financial Crimes Enforcement Network (FinCEN) is re-publishing those FAQs in this document. FinCEN will update this document with any additional BSA-related FAQs involving the PPP.”

These FAQs address PPP loans for existing customers and whether they are considered “new accounts” for FinCEN Customer Due Diligence purposes; collecting beneficial ownership information; and for purposes of Bank Secrecy Act/Anti-Money Laundering compliance, can a PPP lender rely on the same information received from a borrower for the purposes of a First Draw PPP Loan for a Second Draw PPP Loan to that same borrower.
 
NCUA Supervisory Priority – Hemp
As discussed in a previous Memo article, the NCUA has issued its 2021 Supervisory Priorities which can be found here. One of these priorities relates to hemp. Specifically, “the NCUA will continue to encourage credit unions to consider whether they are able to provide financial services to lawfully operating hemp-related businesses within their fields of membership safely and properly. Credit unions that choose to serve hemp-related businesses need to understand the complexities and risks involved and secure the necessary expertise and resources to conduct this activity safely and soundly and in compliance with all applicable laws and regulations.”

NCUA and FinCEN have issued some guidance on the topic that should be reviewed in developing a program:
2019 NCUA guidance
2020 NCUA guidance
2019 Joint statement of FinCEN, FDIC, OCC, Federal Reserve -
6-29-2020 FinCEN guidance

Some additional resources also include:
USDA information on Hemp
SD Hemp information
ND Hemp Information

​The state information details what North or South Dakota will require for hemp licensing. As discussed in the NCUA guidance, “Credit unions should verify that hemp growers possess a valid state or USDA license to grow hemp.”
 
OFAC
The Office of Foreign Assets Control (OFAC) recently announced that it upgraded its sanctions list search tool with fuzzy logic that is more resource-efficient. The new fuzzy logic is intended to improve the performance of Sanctions List Search and make it more responsive.  As a result of the new logic, users may see differences between search results from the previous version of the tool and the newer version.  Please contact OFAC technical support at 1-800-540-6322 Option #8 or [email protected] with any questions that you may have about this change.
 
Infosight Is Not Just for The Compliance Officer!
Compliance touches every part of the credit union. Watch the video to see how InfoSight can assist in all areas of your organization – and then pass it on!
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As always, DakCU members may contact Amy Kleinschmit with any compliance related questions. 

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