(Aug. 20, 2021) Reorganizing its rules to lessen confusion over application of anti-money laundering rules, and working with state regulators to implement those rules, are among the recommendations made by NASCUS in its letter to NCUA concerning the latest annual review of the agency’s regulations.
In February, NCUA asked for comments on its annual review of agency rules, which covers one-third of the regulations (the review is conducted over a three-year period to ensure all agency rules are reviewed at least once every three years). Among the rules being reviewed in 2021: Security program, report of suspected crimes, suspicious transactions, catastrophic acts and Bank Secrecy Act compliance (Part 748 of the agency’s rules), among other things.
The state system offered comments in several areas, including BSA/AML compliance, reporting of suspicious transactions, and organization of NCUA rules (particularly those affecting state credit unions).
Regarding anti-money laundering rules, NASCUS noted that Treasury’s Financial Crimes Enforcement Network (FinCEN) is proceeding with a “no-action letter” program for BSA/AML rules over which that agency has enforcement authority. The program will not affect NCUA rules, NASCUS noted. To mitigate confusion, NASCUS recommended that NCUA rules be reorganized to co-locate or otherwise more clearly identify BSA/AML “FinCEN” rules and NCUA specific rules.
NASCUS also urged NCUA to revisit the monthly requirement that credit union boards be informed of suspicious activity reports (SARs) required under BSA/AML. While that may work for federal credit unions (which are required to meet monthly), NASCUS noted, it does not work for state credit unions where boards are only required to meet quarterly. “In other covered industries, including banking, best practice for reporting to the entity’s board is quarterly, or synchronized to regularly scheduled board meetings,” NASCUS wrote. “NCUA should clarify its expectations for how reporting is handled and make clear that for credit unions with less-than-monthly board meeting, reporting SAR filings at the next available board meeting, or quarterly, would satisfy the regulatory requirement.”
In other comments, NASCUS:
- Reiterated the importance of NCUA working with state regulators to develop regulations to implement the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) National Priorities (National Priorities) as published by the Treasury Department on June 30. NASCUS recommended the agency create a working group with state regulators to develop pending regulations.
- Recommended the agency reinstate the policy of publishing a summary and response to stakeholder comments. “There is real value for stakeholders in understanding NCUA’s response to recommended changes and in gaining insight into the agency’s rational for resisting making various recommended changes,” NASCUS wrote.
- Repeated its call that NCUA reorganize its rules to consolidate and co-locate all National Credit Union Share Insurance Fund (NCUSIF) rules for federally insured credit unions (FISCUs) in one section (or series of consecutive sections), which NASCUS asserted would “provide significant regulatory relief to credit unions without increasing risk to the NCUSIF.”
- Proposed the agency develop a regular review of guidance as a companion to the annual regulatory review. “While not carrying the force of regulation or statute, supervisory guidance provides stakeholders crucial insight into how NCUA interprets compliance with regulation, and as such is just as critical to be regularly evaluated.,” NASCUS wrote.
- Observed that agency rules could be made more consistent by ensuring regulatory provisions containing mandatory elements of compliance contain mandatory language rather than permissive language. “Requirements should also be stated in the active tense such as ‘a credit union shall design its information security program’ rather than passive construction such as a ‘credit union information security program should be designed,’” NASCUS stated.
LINK:
NASCUS comment letter: 2021 NCUA regulatory review
(May 14, 2021) Rules of NCUA Board procedure (including public observation of meetings), registration of residential mortgage loan originators, procedures for debt collection and post-employment restrictions for certain NCUA examiners will all be under scrutiny by NCUA this year as part of its rolling review of its regulations.
According to a list posted on the agency’s website, 12 rules will be under review in 2021. The agency has committed to completely reviewing all of its regulations every three years; it accomplishes that by covering one-third of the rules each year.
NASCUS typically files comments on the agency’s review schedule. See the link below for the complete review schedule for 2021.
LINK:
NCUA regulatory review, 2021
(March 5, 2021) NASCUS has published its summary of NCUA’s regulatory review roster for 2021, which lists the one-third of the agency rules that it is reviewing – part of the three-year review plan by the agency. This summary is also available to members only.
Under the review plan, the agency’s Office of General Counsel maintains a rolling review schedule of one-third of NCUA rules each year, and seeks public comment on those.
Among the rules being reviewed this round: Security program, report of suspected crimes, suspicious transactions, catastrophic acts and Bank Secrecy Act compliance (Part 748 of the agency’s rules); Golden parachute and indemnification payments (Part 750); Registration of residential mortgage loan originators (Part 761); Rules of NCUA Board procedure, promulgation of NCUA rules and regulations, public observation of NCUA Board meetings (Part 791); and Post-employment restrictions for certain NCUA examiners (Part 796).
LINK:
NASCUS Summary: NCUA 2021 regulatory review
(Jan. 22, 2021) Producing a set of recommendations for improving and modernizing federal regulatory review was ordered by President Biden Wednesday, with an aim of ensuring “swift federal action,” according to a memorandum issued by the White House.
The recommendations, according to the memo, “should provide concrete suggestions on how the regulatory review process can promote public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interests of future generations.”
The memo was addressed to the heads of executive departments and agencies, including (presumably), NCUA and other federal financial institution agencies. It also called for proposals designed to ensure that regulatory review “serves as a tool to affirmatively promote regulations” that advance the values outlined. The memo also notes that recommendations should be informed by public engagement with relevant stakeholders.
More specifically, the memo said the recommendations should:
- Identify ways to modernize and improve the regulatory review process;
- Propose procedures that consider the “distributional consequences” of regulation (including in cost/benefit analysis) to ensure regulatory initiatives “appropriately benefit” and do not “inappropriately burden disadvantaged, vulnerable, or marginalized communities;
- Consider ways that the White House’s Office of Information and Regulatory Affairs (OIRA) “can play a more proactive role in partnering with agencies to explore, promote, and undertake regulatory initiatives that are likely to yield significant benefits;”
- identify reforms to promote efficiency, transparency, and inclusiveness of the interagency review process, and determine an appropriate approach with respect to the review of guidance documents.