(Sept. 17, 2021) Federal banking agencies have been collaborating via a “crypto policy sprint” to agree on definitions, use cases, risks, and gaps, and to discuss policy options related to digital assets, the acting head of the OCC said this week. Acting Comptroller Michael Hsu said that, while controlling the growth of crypto and defi (decentralized finance) is challenging given their nature and in light of market demand, “it is imperative that financial regulators work together to ensure that crypto/defi activities that take place within the banking system or are facilitated by banks are trustworthy,” he said, adding that state bank regulators would be included in the cooperation. “Innovation is important, but safeguarding trust is paramount,” he said … Registration is now open for NCUA’s second-ever Diversity, Equity, and Inclusion (DEI) Summit for credit union leaders, trade and support organizations and professionals in the field, set for Nov. 2-4. The virtual event, themed “From Intention to Action,” is aimed at providing those committed to advancing DEI a forum to share best practices, address challenges to advancing diversity, and learn how the NCUA can support the credit union industry in its efforts. The event features a town hall meeting hosted by NCUA Board Chairman Todd Harper with credit union CEOs as participants (including Timothy Anderson, United States Senate FCU; James Schenck, Pentagon FCU; Maria Martinez, Border FCU; and Tonita Webb, Verity CU) … The Oregon Department of Consumer and Business Services has openings for three Financial Examiner 3 candidates (with an underfill option of a Financial Examiner 2). The positions are responsible for: objectively evaluating the condition of financial institutions for safety and soundness; maintaining public confidence in the integrity of the financial system and in individual financial institutions; enforcing both state and federal banking statutes and regulations. See the link below for more details.

LINKS:

Diversity, Equity and Inclusion Summit 2021

Financial Examiner (Financial Examiner 3)

 

(Sept. 17, 2021) Get out your datebooks, update your calendars, jot down some sticky notes to festoon your computer screens: NASCUS has a chock-full schedule of events planned for the remainder of 2021 – with something for everyone in the state system.

At least 10 events are scheduled between now and year’s end focusing on directors, credit union management, engagement, and NASCUS itself. Following is an updated list of the events; use the titles linked to the event’s complete description on NASCUS.org to find out more information about each:

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

(Sept. 17, 2021) A new fund designed to help banks serve low-income and minority communities will count Microsoft and Truist Financial Corp. – the sixth largest U.S. bank – as its anchor investors, the FDIC announced this week.

The FDIC established the Mission-Driven Bank Fund (MDBF), it said, to channel private capital and other resources to minority depository institutions (MDIs) and community development financial institutions (CDFIs). “MDIs and CDFIs are banks, savings banks, and savings associations that provide critically needed capital and financial services to minority, lower income, and rural communities,” the FDIC said.

Investments in the fund, the FDIC has said, would assist MDIs and CDFIs to (among other things) raise capital necessary to serve communities; weather economic downturns; attract technical expertise; and acquire and use technology.

Also joining as a “founding investor” in the fund is Discovery, Inc., a U.S. multinational mass media factual television company, according to its own description. The three groups’ investment would total $120 million; more investments are expected, the FDIC said.

The “anchor investors” and founding investors were selected, the agency has said, through a competition to counsel the fund’s investing. Under the rules of the competition, the investors were required to have experience managing investment funds and with prior work with MDIs and CDFIs, as well as a “deep understanding of the communities they serve.”

The MDBF has been in development by FDIC since last November, when the agency announced it was looking for investors in the fund. The agency said then that it would play no role in fund management or individual investment decisions of the fund. However, it noted it would continue to “assess the alignment of the Fund’s on-going operations with its purpose of assisting Mission-Driven Banks.”

LINK:

FDIC Launches Mission-Driven Bank Fund

(Sept. 17, 2021) An updated “filing instructions guide” (FIG), as well as an updated supplemental guide for quarterly filers, for reporting Home Mortgage Disclosure Act (HMDA) data for 2022 has been posted by the FFIEC, the group said late last week.

According to the FFIEC, the updated FIG and supplemental guide will help institutions file annual HMDA data collected in 2022 with the Consumer Financial Protection Bureau (CFPB) in 2023.

The exam council said there are no significant changes to the submission process for data collected in 2022 and reported in 2023.

LINK:

Filing instructions guide for HMDA data collected in 2022

(Sept. 17, 2021) Online child sexual exploitation (OCSE) crimes are on the rise, and the Treasury’s top enforcement unit is highlighting some financial trends related to the crimes, as well as issuing new suspicious activity report (SAR) filing instructions to address the uptick, the agency said in a notice issued this week.

“Crimes related to OCSE, including the funding, production, and distribution of child sexual abuse materials (CSAM), have increased during the COVID-19 pandemic, according to multiple law enforcement authorities,” Treasury’s Financial Crimes Enforcement Network (FinCEN) said in its notice.

A review of SARs, the agency said, showed some trends, including: that from 2017 to  2020, there was a 147% increase in OCSE-related SAR filings, including a 17% year-over-year increase in 2020. FinCEN said it also observed that OCSE offenders are increasingly using convertible virtual currency (CVC, some of which provide anonymity), peer-to-peer mobile applications, the darknet, and anonymization and encryption services to try to avoid detection. CVC, the agency said, is increasingly the payment method of choice for OCSE officers to make payments to websites that host CSAM.

SAR filing instruction changes made by FinCEN in response to the uptick in OCSE actions include:

  • Financial institutions reference only this notice in SAR field 2 (Filing Institution Note to FinCEN) using the keyword OCSE-FIN-2021-NTC3. “This keyword should also be referenced in the narrative to indicate a connection between the suspicious activity being reported and the activities highlighted in this notice,” FinCEN said. “Financial institutions may highlight additional advisory keywords in the narrative, if applicable.”
  • Financial institutions should also select SAR Field 38(z) (Other) as the associated suspicious activity type to indicate a connection between the suspicious activity reported and OCSE activity and include the term “OCSE” in the text box. “If known, enter the subject’s internet- based contact with the financial institution in SAR Field 43 (IP Address and Date),” the agency said.
  • If human trafficking or human smuggling are suspected in addition to OCSE activity, financial institutions should also select SAR Field 38(h) (Human Trafficking) or SAR Field 38(g) (Human Smuggling), respectively.
  • Reporting entities should use the Child Sexual Exploitation (CSE) terms and definitions in the appendix of the notice when describing suspicious activity, which FinCEN would assist its analysis of the SARs.

LINK:

FinCEN Calls Attention to Online Child Sexual Exploitation Crimes

 

(Sept. 17, 2021) Input from federal credit unions (FCUs) on NCUA’s pre-examination, reporting, and post-examination requirements will be collected through a survey pilot set to launch early next week and administered by the agency’s ombudsman, the agency said in a letter this week. this week.

In the Letter to Federal Credit Unions (LTFCU), NCUA said the survey will allow FCUs to provide timely feedback to the agency while helping to standardize the feedback process. The program is being conducted with FCUs that volunteer to participate; the letter does not apply to federally insured, state-chartered credit unions (FISCUs).

During the pilot, set to run from Sept. 20 through March 31 of next year, FCU CEOs or managers will receive a link to the post-examination survey from the NCUA’s Ombudsman at the conclusion of a regular examination, the agency said. FCUs will have 15 days to submit responses. There will be no survey at the conclusion of a follow-up examination or supervision contact, and credit unions are not required to respond to the survey, it said.

“The Ombudsman will administer the collection of survey responses to maintain separation of the survey responses from NCUA staff conducting examination work,” the letter states. “The Ombudsman is responsible for reviewing survey responses, consolidating data from responses, and reporting the results to NCUA leadership. Survey responses will be collected through SurveyMonkey and will generally not be used to evaluate the results of individual examinations.”

The letter says the survey will include five questions focused on pre-examination, reporting, and post-examination requirements; plus an open-ended question that will ask for credit union feedback on the types of questions the agency should consider in a future permanent survey. Three versions of the survey will rotate among credit unions with completed examinations.

The NCUA said the survey should only be submitted once and can be completed by any senior-level employee or official designated by the credit union manager or CEO. It instructs credit unions not to include personally identifiable information in the survey response.

It also said examination disagreements or reports of waste, fraud, or abuse should not be reported through the survey response but that credit unions should refer to the examination report cover letter to learn how to report such concerns.

LINK:

NCUA LTFCU: Post-Examination Survey Pilot (21-FCU-05)

(Sept. 17, 2021) $100,000 is being made available for minority depository institution (MDI) mentoring grants to eligible credit unions, NCUA announced this week. The regulator said federally insured credit unions with both the MDI and low-income designations are eligible to apply for the grants between Oct. 11 to Oct. 29. The grants are to support mentoring relationships that allow larger, experienced credit unions the opportunity to provide guidance to other MDIs.

“The expiration of unemployment benefits and foreclosure and eviction moratoriums mean that low-income households and communities of color will face financial stress in the coming months,” NCUA Chairman Todd Harper said in a statement. “The NCUA’s mentoring grants program helps MDI credit unions provide greater opportunities for members to build financial security, make investments in communities, and help to close the wealth gap. I strongly encourage eligible MDIs to apply to this program.”

LINK:

NCUA MDI Mentoring Grant Round Reopens Oct. 11

NCUA grants page

(Sept. 17, 2021) Existing laws and regulations provide credit unions, banks and other supervised entities regulatory flexibility to take certain actions that can benefit consumers in communities under stress from disasters or emergencies and hasten recovery, CFPB said in policy guidance issued this week.

In a “statement on supervisory practices regarding financial institutions and consumers affected by a major disaster or emergency,” the bureau said it would consider the impact of major disasters or emergencies on supervised entities themselves when conducting supervisory activities.

“Supervised entities can make use of existing regulatory flexibility where doing so would benefit consumers affected by a major disaster or emergency,” the bureau wrote in the statement.

The statement offers examples of flexibility under Regulations B (implementing the Equal Credit Opportunity Act, ECOA), X (Real Estate Settlement Procedures Act, RESPA), and Z (Truth in Lending Act, TILA).

On supervisory response, the CFPB said it recognizes that supervised entities “may themselves experience difficulties due to a major disaster or emergency.” The bureau said that, when conducting exams or other supervisory activities, it would consider the circumstances institutions may face following a major disaster or emergency “and will be sensitive to good-faith efforts to assist consumers.”

Separately this week, NCUA joined with the federal banking agencies in issuing an interagency statement on supervisory practices regarding credit unions and banks affected by Hurricane Ida. The statement, relatively routine for the agencies in the wake of a storm or other natural disaster, noted regulators “recognize the serious impact of Hurricane Ida on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.”

LINK:

Statement on Supervisory Practices Regarding Financial Institutions and Consumers Affected by a Major Disaster or Emergency

 

(Sept. 17, 2021) A proposed rule on subordinated debt will be on the agenda of the NCUA Board when it meets next week, according to an agenda published Thursday by the agency.

According to the agenda posted on its website, the NCUA Board will consider a rule on the subordinated debt under parts 702 (capital adequacy) and 703 (investment and deposit activities) under its regulations.

Late last year, the agency adopted a subordinated debt final rule on allowing well-capitalized, federally insured credit unions to count the debt instrument as capital for risk-based net worth purposes. Under the final rule ultimately published in January of this year, the rule is slated to take effect Jan. 1, 2022. That date is the same that new risk-based capital rules for credit unions are to take effect.

The rule also grandfathered any secondary capital issued before the rule’s effective date of Jan. 1, and preserves that capital’s regulatory capital treatment for 20 years after the effective date. The “grandfathered secondary capital” generally, the agency said, remains subject to requirements in the agency’s current secondary capital rule.

Also on the agenda for the board’s meeting next week is:

  • A quarterly report on the National Credit Union Share Insurance Fund;
  • A review of the business loan rule for Oregon credit unions (to determine if the state rule covers all the provisions in the NCUA rule and is no less restrictive, thus exempting credit unions in the state from compliance);
  • A 2021 mid-session budget review;
  • And an item merely listed as “NCUA Board Agenda.” No other information is given.

The board meeting is scheduled to get underway at 10 a.m. ET, and will be streamed live via the Internet.

LINK:

NCUA Board Agenda for the Sept. 23, 2021 Meeting