Legislative & Regulatory Update

AML/CFT Requirements; incentive-based compensation; succession planning; and check out ViClarity’s comprehensive suite of online resources! 

by John Alexander, Director of Legislative & Regulatory Affairs

Regulatory Overhaul: AML/CFT Requirements
The National Credit Union Administration (NCUA) and other federal regulators are seeking public comments on a proposal to update anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements. This proposal aligns with the Anti-Money Laundering Act of 2020 and involves identifying, evaluating, and documenting risks related to money laundering and terrorist financing, as well as considering FinCEN’s national AML/CFT priorities. Comments are due 60 days after publication in the Federal Register.

Incentive-based Compensation Rule
The NCUA Board approved a proposed rule on incentive-based compensation, in line with section 956 of the Dodd-Frank Act. The rule, which passed by a 2-1 vote, requires financial institutions with over $1 billion in assets to disclose and report compensation arrangements. Institutions are divided into three categories based on asset size:

• Level 1: $250 billion and above
• Level 2: $50 billion to $250 billion
• Level 3: $1 billion to $50 billion

Comments on this rule will be accepted for 60 days following publication in the Federal Register.

Succession Planning
The NCUA Board also approved a revised rule on succession planning by a 2-1 vote. This rule requires boards of federally insured credit unions to establish and maintain written succession plans for key positions, with annual reviews. The rule includes a template for smaller credit unions and aims to ensure continuity in leadership.
Comments on the succession planning rule are due 60 days after publication in the Federal Register.

Loan Interest Rate Ceiling
The NCUA Board unanimously decided to maintain the current 18-percent loan interest rate ceiling for federal credit unions until March 10, 2026. This decision ensures that federal credit unions can manage liquidity, capital, earnings, and growth effectively while providing members with safe and affordable credit.

These regulatory updates reflect the NCUA Board’s commitment to strengthening governance and operational stability within federal credit unions. Your attention to these proposed rules and participation in the comment periods is crucial.

Dues-Support Compliance Solution Available to DakCU Members!
The Dakota Credit Union Association maintains a valuable dues-supported partnership with ViClarity, a world leader in credit union compliance solutions. This collaboration provides our members in the Dakotas with comprehensive compliance support at no additional cost. ViClarity’s expertise in governance, risk, and compliance consulting ensures that credit unions can rely on them for any compliance questions, policy or disclosure reviews, and preparation for external or regulatory audits. 

ViClarity is committed to making regulatory compliance easier through their superior consulting services and technology solutions. They currently support nine credit union leagues and associations across 16 states, serving over 1,000 credit unions nationwide. Their services encompass governance, risk, and compliance management, enabling credit unions to stay focused on improving the financial well-being of their members and communities.

As a DakCU member, you have access to exclusive ViClarity resources, including a Compliance Hotline, Compliance Updates, Quarterly Webinars, BSA Training, and a comprehensive suite of online resources! Don’t hesitate to contact me if you have any questions or need assistance in setting up your account.
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