(Dec. 4, 2020) NASCUS supports making some changes to recordkeeping and travel rule regulations under rules implementing the Bank Secrecy Act (BSA) to promote calibrating the value of anti-money laundering measures with operational, compliance and expense considerations of credit unions and other institutions, NASCUS wrote in a comment letter filed Nov. 27.
In a letter to the Federal Reserve Board, NASCUS responded to a joint request for comments from the Fed and the Financial Crimes Enforcement Network (FinCEN). When the comment request was issued Oct. 23, the two agencies said they were issuing the portion of the rule concerning recordkeeping jointly because of their shared authority; the portion on travel was issued singly by FinCEN as it has sole authority over that area.
Under current rules, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds greater than $3,000, the agencies stated. Under the proposal, the applicable threshold for international transactions would drop to $250; the threshold for domestic transactions would remain the same ($3,000).
NASCUS, in its letter, wrote that lowering the threshold for fund transmittals beginning or ending outside of the U.S. will come with a cost for credit unions and other financial institutions. “For some institutions, the increased data storage requirements of capturing and preserving required information could be a significant burden, particularly as credit unions manage the economic dislocation resulting from the ongoing pandemic,” NASCUS wrote.
The association stated that the agencies should also consider that while the lower threshold applies only to transactions beginning or ending outside of the United States, for many institutions the best practice is to set data collection policies to the “lowest requirement” to ensure consistent compliance. The agencies’s proposal, NASCUS wrote, “would result in the capture and retention of significant amounts of data even for those credit unions doing only infrequent international funds transmittals,” NASCUS wrote.
In other comments, NASCUS also:
- Wrote that it supports including a specific standard for “reason to know” in the rule to mitigate the potential for confusion and uncertainty as to the standard to be met. “We would also recommend clear guidance on the obligations of all financial institutions in the chain of a funds transmission with respect to identifying cross-border transactions and compliance with the final rules,” NASCUS wrote. Under the proposal, funds transfer or transmittal of funds would be considered to begin or end outside the U.S. if a financial institution knows or has reason to know that the transmittor, transmittor’s financial institution, recipient, or recipient’s financial institution is located in, is ordinarily resident in, or is organized under the laws of a jurisdiction other than the United States or a jurisdiction within the United States.
- Urged FinCEN to continue to evaluate the BSA framework to eliminate redundant monitoring, reporting or recordkeeping requirements. “Reducing compliance burden in ‘other’ areas of the BSA would allow credit unions to reallocate resources to those areas where enhanced diligence, or more granular reporting might be needed by law enforcement,” NASCUS wrote.
(Dec. 4, 2020) The CFPB’s proposal to develop a rule on consumer access to financial records has been summarized by NASCUS and is posted on the website; the summary – the latest in the association’s continuing series to shine a light on key regulatory developments – is available to members only.
In October, the bureau finally released its advance notice of proposed rulemaking (ANPR) on the issue of consumer access to financial records, following up on a promise it made in July, which in turn followed a symposium on the subject in February.
The bureau said in October that its ANPR is aimed at fulfilling its obligations under a provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The proposal’s summary states that the provision (Sec. 1033) provides that the agency will issue rules prescribing that a consumer financial services provider must make available to a consumer information in the control or possession of the provider concerning the consumer financial product or service that the consumer obtained from the provider.
The ANPR seeks comments and information, CFPB said, on costs and benefits of consumer data access, competitive incentives, standard-setting, access scope, consumer control and privacy and data security and accuracy.
In late February, the bureau sponsored a symposium on the law’s requirement for consumer records access rules. The event featured panels discussing benefit and risks of consumer-authorized data access, as well as developments in the area of records access. Then in July, the bureau gave a sort of “head’s up” that the ANPR was coming, saying that the call for information would help the agency understand and address “competing perspectives.”
Comments are due on the ANPR Feb. 4.
LINK:
NASCUS summary: CFPB’s ANPR on consumer access to financial records (members only)
(Dec. 4, 2020) Credit unions, banks and other entities questioning whether to comply with regulatory requirements can submit a request to the CFPB to clear up any uncertainty, the agency said under a new policy finalized this week.
NASCUS has already outlined the new policy in a summary (available to members only).
“Regulatory certainty promotes compliance if the law applies and avoids unnecessary compliance costs if the law does not,” the CFPB said of its new policy in a release.
In June, the bureau unveiled a pilot program to allow entities to submit a request for clarity on its regulations “where uncertainty exists.” The “pilot advisory opinion” program (referred to as “AO”) reviewed the submissions, selected topics based on the program’s priorities, and then made responses available to the public. The program was proposed as a procedural rule with a request for comment.
Monday’s release by the bureau made the program permanent. Under the final policy, the bureau said, any person or entity can submit a request for an advisory opinion via email (to [email protected]). The bureau said it would review the submissions received, prioritize certain requests for response, and issue opinions with a description of the incoming request.
The bureau said it may also decide to issue advisory opinions on its own initiative, and that (to increase transparency), it would publish all advisory opinions in the Federal Register and on its website.
LINKS:
NASCUS summary: Advisory opinions policy (members only)
(Dec. 4, 2020) Following the Senate’s action to fill out the membership of the NCUA Board, on Thursday the Senate filled one of two empty seats on the Federal Reserve Board, confirming Christopher Waller. But it wasn’t a cakewalk: by many accounts, it was one of the closest confirmation votes ever for a central bank board member.
Waller, now executive vice president/director of research for the Federal Reserve Bank of St. Louis (and a former professor of economics at the University of Notre Dame), was confirmed on a vote of 48-47, with all Democrats and Republican Sen. Rand Paul (Ky.) voting against.
Thursday’s vote marked the first time the Senate had confirmed a Fed governor in a lame-duck period that follows the November election before the president’s term ends in January. Further, Fed governors are more typically confirmed on much more lop-sided votes, with 60 votes or more in favor.
The close vote for Waller (considered a “non-controversial” nominee) may signal bad news for the future on the Fed Board for the nominee to the other open seat: Judy Shelton. She has received a cool reception in the Senate, particularly among Democrats, for her past comments about bringing back the gold standard, questioning the effectiveness of federal deposit insurance, and the Fed’s independence from political influence.
Last month, Shelton’s nomination came before the Senate and failed to earn enough votes to cut off debate – action that would have paved the way for a final vote on her nomination. The close vote on Waller likely indicates the controversial Shelton will have a tough time being considered again in the Senate. In fact, Senate Majority Whip John Thune (R-S.D.) said Thursday that another vote on Shelton’s nomination was “unlikely” at this point.
(Dec. 4, 2020) The Utah Department of Financial Institutions (DFI) is the latest state credit union regulator to earn accreditation from NASCUS, the association announced this week. The Utah DFI, which regulates 30 credit unions across the state, earned its accreditation for five years.
The accreditation is the result of a substantive process that includes disciplined self-evaluation, peer review and ongoing monitoring. The process is administered by the NASCUS Performance Standards Committee (PSC) and measures a state regulatory agency’s ability and resources to effectively carry out its regulatory and supervisory programs. A credit union state supervisory agency must demonstrate that it meets standards in agency administration and finance, personnel and training, examination, supervision and legislative powers to earn accreditation.
“Congratulations to the Utah DFI for achieving this distinction,” said NASCUS’ Lucy Ito. “Accreditation is credible evidence of an agency’s capabilities, which also benefits credit unions in the state by providing recognition of the professionalism of a state agency’s regulators, supervisors and staff – and illustrates how a state regulatory agency has met the highest levels of regulatory proficiency.”
More than 85% of state-chartered credit union assets are supervised by NASCUS’ accredited state agencies. The NASCUS Accreditation Program was adopted in 1989 to administer and assure the quality standards of states’ credit union examination and supervision. Modeled on the university accreditation concept, the program applies national standards of performance to a state’s credit union regulatory program.
LINK:
NASCUS Accreditation Program
(Dec. 4, 2020) John Ducrest, long-time (since 2004) Louisiana commissioner of financial institutions in the state’s Office of Financial Institutions (OFI), has retired, effective Dec. 2. Among many other contributions to NASCUS, Ducrest drove critical enhancements to NASCUS’ Accreditation Program and most recently served as Chairman of the NASCUS Performance Standards Committee. Christine Kirkland has been named acting commissioner of the OFI … Meanwhile, in Kansas, Vickie Hurt has assumed her duties (as of Nov. 28) of acting administrator of the Kansas credit union administrator; the state’s Senate is expected to take up her confirmation as permanent administrator in the 2021 legislative session. She is also a former credit union CEO and board member of the Kansas Credit Union Association. Hurt replaces Jerel Wright in the position, who retired Nov. 28 following 14 years of service (1997-2005 and 2014-20).
(Dec. 4, 2020) CU Campus 365 is an alliance between NASCUS and BAI, the industry leader in compliance training, with a history of more than 95 years in the financial services industry. The product is a new compliance and professional skills training benefit for NASCUS credit union members that offers credit unions affordable, efficient, and comprehensive solutions for compliance training and professional skills learning featuring the latest in courseware and the BAI Learning Manager, a learning management system (LMS) specifically designed to meet the demands of the financial services industry. With it, credit unions have the tools they need to minimize compliance risk and increase employee development. Click on the link below to learn more and to schedule your demo of the program.
LINK:
Welcome to CU Campus 365!
(Dec. 4, 2020) Nominations for the NASCUS 2020 Pierre Jay Award – which recognizes the individuals, programs or organizations whose contributions have benefited the state credit union system in a significant way – are due Dec. 31. The award honors those who have demonstrated outstanding service, leadership and commitment to NASCUS and the state system. The award will be conferred during a virtual event in the first quarter of 2021. NASCUS members may nominate any person, program, or organization who or that has made a significant contribution to the state credit union system is eligible to be nominated. Nominees do not necessarily need to be affiliated with NASCUS. Examples of individuals, programs or organizations to be nominated include credit union organizations, volunteers (including committee members), staff members, or chief staff executives; and, state/federal organizations, state/federal lawmakers, state/federal regulators, or others. See the link below to submit a nomination.
LINK:
Pierre Jay Award: Details, nomination form
(Dec. 4, 2020) NASCUS credit union members will receive their 2021 membership dues via email invoices next week, arriving from the address of [email protected]; subject line will be “NASCUS 2021 Membership Dues Invoice.” Those who do not receive their invoice by Friday, Dec. 11, should send an email to NASCUS at [email protected]. NASCUS recognizes the impact the global pandemic has had on credit unions, and in 2021 the effects likely will be felt the most. NASCUS reassessed its value proposition to credit unions and doubled down on the commitment to deliver affordable alternatives to professional development through new compliance training solutions and the development and delivery of exclusive resources in collaboration with state regulators, as well as the many other unique products and services NASCUS provides. We will continue to monitor and solicit member feedback to build on benefits that credit unions value the most.
(Dec. 4, 2020) Banks, “as soon as practicable,” should cease entering into new contracts that employ LIBOR as a reference rate in loan contracts, the three federal banking agencies said this week. LIBOR (London Interbank Offer Rate), which is being phased out because the transactions it is based on don’t occur as often as they did in prior years, is used by many banks (and credit unions) as a benchmark for such products as adjustable mortgage loans. The agencies’ recommendation is being made, they said, in order to facilitate an orderly – and safe and sound – transition to alternative reference rates. Meanwhile, the administrator of the soon-to-be-defunct LIBOR (Intercontinental Exchange (ICE)) also this week proposed a plan to cease publishing the U.S. dollars version of the rate at the end of next year.
LINK:
Statement on LIBOR Transition Nov. 30, 2020
(Nov. 25, 2020) Change is coming to the NCUA Board in the next 10 days or so, following change that already occurred late last week with the resignation of one of the board members. Here’s a quick rundown of what happened late last week, what’s scheduled to happen next week, and a look at what may be ahead for leadership of the agency.
- Last week, Senate Majority Leader Mitch McConnell (R-Ky.) announced (via the Senate’s executive calendar, which lists when executive branch nominees will begin to be considered by the Senate) that the nomination of Kyle S. Hauptman to be a member of the NCUA Board would be considered as early as Monday of next week (Nov. 30). Hauptman was nominated by outgoing President Donald Trump (R ) last summer to take the seat of J. Mark McWatters, whose term expired in August 2019; McWatters has been serving in a holdover capacity until his successor (Hauptman) was confirmed by the Senate. McWatters is a former chairman of the NCUA Board (succeeded by current Chairman Rodney Hood last year), who was named to that position by Trump.
- On Thursday, during the regular monthly meeting of the NCUA Board, both Board Members McWatters and Todd Harper expressed some dissatisfaction with the proposed NCUA budget for 2021, which is scheduled to be the subject of a Dec. 2 briefing by the agency (and which NASCUS has requested to provide comments for). McWatters also announced that he would not support the 2021 staff budget as drafted “as long as I’m on this board.” The NCUA Board is scheduled to consider the 2021 budget at its next monthly meeting, set for Dec. 17.
- Late Friday, McWatters released a copy of a letter he said he had sent to Trump that day informing the president that he was submitting his resignation. “As the Senate is scheduled to confirm my successor in the next few days, I hereby resign my position as of today,” McWatters wrote.
- Monday, Hood publicly released a statement noting McWatters’ resignation, observing that “his years on the NCUA Board are a credit to his decades-long career in law and policymaking. I wish Mark all the best in his future endeavors.” (NCUA Board Member Todd Harper – who also voiced concerns about the budget – released a statement on social media reading (in part) “Mark leaves the Board with a commendable record of achievement, and I wish him well in his future endeavors.”)
The end result of all of this: When the NCUA Board meets Dec. 17 to consider the 2021 budget – including the overhead transfer rate (OTR) for the NCUSIF portion of the agency spending plan – there could be one new face on the board, and perhaps two votes in favor of the agency’s budget for next year.
Looking ahead, with the transition of President-elect Joseph R. Biden (D) now officially underway in advance of the Jan. 20 transfer of power from Trump, there is likely to be more change. The new president will be in a position to designate a new chairman of the NCUA Board (that position is not confirmed by the Senate if the individual has already been confirmed as a board member). As the only Democrat-appointee on the board, Harper is in line to become the next NCUA Board chairman if the president decides to take action.
The most recent example of the president tapping a member of his own party to be chairman: McWatters was named acting chairman of the agency board by Trump on Jan. 26, 2017 – six days after taking the oath of office as president. McWatters replaced Rick Metsger who remained on the board (ultimately to be succeeded by Hood). The “acting” part of McWatters’ title was removed by Trump in June of that year.
Harper’s term on the board ends in April; however, he may serve on the board until a successor is confirmed by the Senate. Hood’s term ends in August 2023; Hauptman, if confirmed, would inherit a term that runs to August 2025.
(Nov. 25, 2020) NASCUS President and CEO Lucy Ito expressed the state system’s thanks to McWatters for his efforts as both a member and chairman of the NCUA Board for more than six years. “During his tenure, particularly as chairman of the board, Mark was receptive and responsive to the views and ideas of the state system,” Ito said. “For example, he was the first board member in 20 years to objectively assess the old, opaque overhead transfer rate (OTR) methodology and challenge the agency to do more than tweak it, which resulted in a complete overhaul of the methodology to be more fair, more equitable, and more transparent. In a number of other areas – notably risk-based capital and, especially, subordinated debt – Board Member McWatters carefully listened, concisely analyzed, and fairly evaluated the needs of the state system, as well as the entire credit union community. We thank him for his service, and wish him well going forward.”