(Dec. 23, 2020) Debt collectors must provide, at the outset of collection communications, detailed disclosures about the consumer’s debt and rights in debt collection, along with information to help consumers respond, under a final rule issued late last week by the CFPB.
The rule, the CFPB said, requires debt collectors to take specific steps to disclose the existence of a debt to consumers, orally, in writing, or electronically, before reporting information about the debt to a consumer reporting agency (CRA).
It also prohibits debt collectors from making threats to sue, or from suing, consumers on time-barred debt.
“Before a collector furnishes information about a debt to a consumer reporting agency, the final rule generally requires the collector to take one of several actions to contact the consumer about the debt,” the bureau said of its new rule in a release. The actions, the bureau said, include speaking with consumers about their debts by telephone, mailing a letter to the consumer, or sending an electronic message about the debt to the consumer.
“If mailing a letter or sending an electronic message to the consumer, the collector must wait a reasonable period of time to receive a notice of undeliverability, such as 14 days, before furnishing information to a CRA and must not furnish if a notice of undeliverability is received unless the collector takes additional steps,” the bureau said. “Collectors are also prohibited from, and will be strictly liable for, suing or threatening to sue a consumer to collect a time-barred debt, which is defined as a debt for which the applicable statute of limitations has passed.”
According to CFPB, the final rule is the product of a seven-year process that included a notice of proposed rulemaking (NPRM) in 2019, a supplemental NPRM in February and what the agency described as “extensive consumer disclosure testing.” It also follows a CFPB regulation issued in October focusing on communications between consumers and debt collectors under the Fair Debt Collection Practices Act (FDCPA). The bureau said that rule was intended to “restate and clarify” prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.
Regarding the rule issued Friday, CFPB said that, under it, debt collectors will be also be required to provide “readily understandable” disclosures that contain more information than consumers now receive when the collector first begins to communicate with the consumer to collect the debt.
(Dec. 23, 2020) New requirements for certain transactions involving convertible virtual currency (CVD) or digital assets with legal tender (LTDA) status were proposed by the Treasury’s financial crimes arm today, which would require financial institutions to submit reports, keep records and verify customer identifies under certain circumstances.
The proposal is meant to curb the use of virtual currencies to move illicit funds.
The Treasury’s Financial Crimes Enforcement Network (FinCEN) said its proposal would affect transactions involving assets that are held in both “hosted” wallets (those held at a credit union or bank) as well as “unhosted” wallets (those that are not hosted by a third-party financial institution).
Under the proposal by FinCEN (which is taking comments until Jan. 4), credit unions and banks would be required to file a report to the agency with certain information related to a CVD or LTDA transaction and counterparty, and to verify the identity of their customer, if a counterparty to the transaction is using an unhosted or otherwise covered wallet and the transaction is greater than $10,000.
Financial institutions would also be required to keep records of a customer’s CVC or LTDA transaction and counterparty—including verifying the identity of their customer—if a counterparty is using an unhosted or otherwise covered wallet and the transaction is greater than $3,000.
The proposal does not, FinCEN said, modify the regulatory definition of “monetary instruments” or otherwise alter existing anti-money laundering regulatory requirements applicable to monetary instruments.
LINK:
Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets
(Dec. 23, 2020) A 2021 budget of $341.4 million – with an overhead transfer rate (OTR) of 62.3% — was approved by the NCUA Board on a split vote of 2-1 at its meeting late last week, with barely two weeks to go until that budget takes effect for the new year.
The agency’s budget for next year is down about 1.7% from the 2020 budget, but the OTR went up by 100 basis points. Board Chairman Rodney Hood and (now) Vice Chairman Kyle Hauptman voted for the 2021 budget; Member Todd Harper against it.
The OTR represents money that is transferred from the National Credit Union Share Insurance Fund (NCUSIF) to the operating budget of the agency to cover “insurance-related” expenses of the agency. The remainder of the operating budget is covered by the operating fee paid by federal credit unions, resulting in a split of 62.3% (from the OTR) and 37.7%, respectively.
NASCUS President and CEO Lucy Ito said the OTR increase for next year is a sign of the need for NCUA to reconsider how it allocates expenses.
In a press statement following last Friday’s board meeting, Ito said what appears counterintuitive to the state system in the 2021 NCUA budget is that the projected increase in workload for state exams is not matched with an at least equal if not greater increase in workload for federal credit union exams. She noted that assets between state and federal CUs are approximately equal, yet FCUs outnumber FISCUs by more than 1,000 (3,213 FCUs versus 1,920 FISCUs as of the end of the 2020 third quarter).
Further, she said, the 1-point OTR increase will essentially mean there will be $3.3 million less to cover losses by the National Credit Union Share Insurance Fund should those materialize as the result of an economic downturn due to the financial impact of the coronavirus pandemic
“NASCUS will continue to work with NCUA to allocate expenses to the OTR in a way that safeguards balance and equity, and that ensures that the insurance fund has the resources necessary to protect the savings of credit union members,” she said.
Along those lines, she added, NASCUS welcomes the formation of an OTR working group comprised of NCUA, state regulators, and NASCUS to assure transparency in and reasonableness of cost allocation assumptions to foster equity between federal and state credit unions.
LINKS:
Notice: Overhead transfer rate
Board action memorandum — 2020-2021 budget
NCUA 2021-2022 budget justification (Dec. 18, 2020)
(Dec. 23, 2020) All three federal banking agencies late last week jointly released a proposal requiring banks and banking organizations they supervise to promptly notify their primary federal regulator in the event of a computer security incident.
The joint release follows the individual adoption of the proposal by each agency (such as by the FDIC Board) earlier in the week.
Under the proposal, notification (or alerts) would be required for incidents that could result in a banking organization’s inability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of a banking organization, or impact the stability of the financial sector.
The agencies said the proposed rule is intended to provide the agencies with an early warning of significant computer security incidents and would require notification as soon as possible and no later than 36 hours after a banking organization determines that an incident has occurred.
NCUA did not join in the proposal.
In addition, the agencies said, the proposal would require service providers to notify affected banking organizations immediately when the service provider experiences computer security incidents that materially disrupt, degrade, or impair certain services they provide.
LINK:
Joint Release/Agencies Propose Requirement for Computer Security Incident Notification
(Dec. 23, 2020) A new title has been bestowed on the newest member of the three-member board for the NCUA, who is now “vice chairman,” according to a release from the agency late last week.
Kyle S. Hauptman, who was confirmed by the Senate to a seat on agency’s board Dec. 2 – and who joined his first two meetings of the board last week (on Dec. 17 and 18) – was, late in the day Friday, tapped as vice chairman of the panel. The title — while indeed an honor — is largely honorific: other than sitting in for the board chairman in that individual’s absence, and taking a role in some appeals for Freedom of Information Act (FOIA) request decisions (under part 792.28 of agency regulations), there are few specific duties, responsibilities or benefits attached to role, other than those assigned by NCUA Board Chairman Rodney Hood.
The new vice chairman, in a press statement, said that in his role he looks forward to “working with credit unions, my fellow Board Members, and Congress on solutions that provide regulatory relief for the credit union community and expand the use of technology to reach underserved communities.”
This week, Hauptman named veteran credit union service organization (CUSO) and state league executive Sarah Canepa Bang as his senior adviser. The agency, in a release Monday, said Bang has broad experience in the credit union industry that includes serving as executive vice president of industry relations and president and chief strategy officer at CO-OP Financial Services. Previously, she was (among other things) chief executive officer at Financial Service Centers Cooperative, Inc., and executive vice president of the Oregon Credit Union League and Affiliates.
In other agency personnel developments this week, NCUA officially announced the retirement of J. Owen Cole, associate director of the policy and markets division in the NCUA’s Office of Examination and Insurance at the end of this month. NCUA said Cole served in various roles during his 27-year tenure, including senior investment officer, director of the division of risk management, associate regional director of operations, deputy executive director, and acting chief of staff. Most recently he had also served as president of the NCUA Central Liquidity Facility, which addresses potential credit union system liquidity risks.
LINKS:
NCUA Board Designates Hauptman as Vice Chairman
Sarah Canepa Bang Appointed Senior Advisor to Vice Chairman Hauptman
Owen Cole, Associate Director for Policy and Markets, Announces Retirement
(Dec. 23, 2020) NASCUS 2021 membership invoices
NASCUS credit union and associate members were sent their 2021 membership renewal invoices Tuesday from [email protected]. Please contact NASCUS member relations staff if you did not receive an invoice. In advance, thank you for your continued membership. We look forward to tackling the new year together in 2021. Together, we can do this.
CU Campus 365: Be your credit union’s compliance training hero.
NASCUS credit union members get great pricing for the new member benefit. CU Campus 365, the new compliance training program, launched last month. With 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, credit unions have the tools they need to minimize compliance risk and increase employee development. The alliance, called CU Campus 365, delivers effective and re-imagined learning to your credit union staff and directors to use anytime, anywhere, using a sophisticated LMS. For a review of the benefits of CU Campus 365, visit us here.
CU Campus 365’s course libraries offer more than 530 compliance courses that cover more than 55 regulations and are updated constantly to align with the latest regulations plus more than 140 professional skills courses to build your employees’ career growth and development.
NASCUS invites you to experience the benefits of CU Campus 365. To learn more about CU Campus 365’s powerful training solutions, complete this form or email us at [email protected].
Pierre Jay Award Nominations
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; it will be presented 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. Nominees can include 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. 23, 2020) The Federal Reserve Board now has six (out of a total seven) members, as newest Gov. Christopher Waller joined the board after taking his oath of office last Friday. Waller was confirmed by the Senate Dec. 3; he is the former research director for the St. Louis Fed, and a former professor. Meanwhile, there is still no word on confirming the nominee to the seventh and final seat on the board. A vote on controversial nominee Judy Shelton has been stalled in the Senate since at least November; Senate leadership has yet to announce plans to take up the nomination again … Big banks saw their losses rise to more than $600 billion under conditions simulated in a second stress test conducted by the Federal Reserve – but the banks’ capital ratios, despite the losses, would continue to be well above the minimum required (falling from 12.2% to 9.6%, but still above the 4.5% minimum), the central bank said late last week. Nevertheless, the Fed plans to keep restrictions on the banks’ distributions to investors and share repurchases, and won’t make changes to capital requirements … How to spot warning signs of human trafficking is in the spotlight for a webinar next month sponsored by NCUA, set for Jan. 7. The agency said the event will provide an overview of human trafficking and its impact on communities, law enforcement’s efforts to combat it, and potential red flags in credit unions. Attendees will also learn how to report concerns about human trafficking to the proper authorities, the agency said. There is no charge for attending, although advance registration is required … This is the final issue of NASCUS Report for 2020; we’ll see you again on Jan. 8. In the meantime: Happy Holidays – and have a terrific New Year!
LINKS:
Federal Reserve Board releases second round of bank stress test results