NAFCU Compliance Blog

Book of Answers Updated; NCUA Board Meeting Today

NAFCU has updated its Book of Answers.   NAFCU members can access it here.  (Second link in research tools area.)  The Book of Answers is a growing compilation of questions and answers that appear in our monthly regulatory compliance newsletter. 

If you were a member, you'd see tons of groovy stuff like this:

Question: My credit union received a grand jury subpoena concerning a member. Must we file a suspicious activity report (SAR)?

Answer: Not necessarily. FinCEN indicates that the receipt of a grand jury subpoena means that a grand jury seeks information while investigating the subject of an investigation, and therefore the receipt of such a subpoena, by itself, does not mandate the filing of a SAR. The receipt, however, should trigger a risk assessment of the member’s account and a review of account activity. Should the review uncover suspicious activity, a credit union should submit a SAR pursuant to regulatory requirements and applicable dollar thresholds. See FinCEN’s SAR Activity Review, Trends Tips & Issues (Issue 10), pp. 42-43. The same logic will apply when a member’s account is the subject of any other type of subpoena, 314(a) request, or national security letter.
March 2007

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NCUA's monthly board meeting is today.  After 9 a.m., you can read the draft board items here.  From a compliance point of view, the NCUA is set to adopt a final rule regarding eligible obligations.

With Three Flavors, Who Enforces What?

Credit unions come in three flavors.  First, there are federal credit unions.  Then you have your state-chartered, federally-insured credit unions. Finally, you have your state-chartered, privately-insured credit unions.   Depending on which flavor your credit union is, you will have to answer to different regulators.  For example, NCUA enforces compliance with the Fair Credit Reporting Act (FCRA) for federal credit unions.  The Federal Trade Commission enforces the FCRA for state-chartered, federally insured and state chartered, privately insured credit unions. 

This would be hard to keep straight, especially with the high number of laws, regulations and agencies that exist.  The good news is this - you don't have to keep it straight.  NCUA has done the hard work for you!

Here is a chart that NCUA maintains that explains who enforces what regulation or statute against all three types of credit unions.   This chart comes in handy all the time for the Compliance Guy.  Enjoy!

NCUA Board Meeting Agenda Set; Bylaws; Compliance and Dating

First off, NCUA has released the agenda for its December Board Meeting.  You can access it here.  (It appears fairly light to the Compliance Guy from a compliance point of view.)

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NAFCU members - we've published a Regulatory Final on NCUA's recent final rule that incorporates its bylaws into NCUA's regulations.  You can access it here.  (NAFCU member log-in needed.)

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OK, its Friday.  How about something a little bit lighter.  The Compliance Guy is getting married this May.  Therefore, my care-free, dating days are now behind me.  (Thank the Lord!) But those dating days really prepared me for compliance research.  Don't believe me?  Well, here's one dating/research connection.  I'll share others in future weeks.

Dating/Compliance Lesson #1.  Watch out for loaded questions
Most people are polite by nature. We prefer the oblique to the blunt and honeycombs to red vinegar. The women I date are no different.

They often ask one question, when they should be asking another.

What do you think about smokers? What do you think about dogs? What do you think about big families? These are all loaded questions. My date doesn’t really care what I think about smokers in general.

She wants to know if she can light one up after gulping down a $90 bottle of wine that the waiter said would complement her crab cakes.

As a compliance officer, you often are in the same boat. “Can we charge this fee?” upper management may ask. You may be tempted to serve up a yes or no answer, but be careful. The question is loaded. As a rule of thumb, I always translate “Can we charge this fee?” into “We’d like to charge this fee. We think we can do it this way. Can we? If we can’t, is there another way? Oh, and how will it affect the APR and our disclosure requirements? And is there anything else I forgot to ask?”

Carefully determine what management needs. A good compliance officer will ask questions and seek clarification. What is management trying to do, and what does it want? Until you truly answer those questions, your research efforts may go wasted.

12 C.F.R. § 701.35 - Your Buddy

Can a regulation really be your buddy?  If you are a federal credit union, you bet.   The regulation noted in the title, 12 C.F.R. § 701.35, prevents state lawmakers from tinkering with federal credit union operations.  Subsection (c) notes that:

A Federal credit union may, consistent with this section, parts 707 and 740 of this subchapter, other federal law, and its contractual obligations, determine the types of fees or charges and other matters affecting the opening, maintaining and closing of a share, share draft or share certificate account. State laws regulating such activities are not applicable to federal credit unions.  (Emphasis added.)

Examples?

• A state law says your credit union must pay dividends on a mortgage escrow account.  Your buddy says otherwise.
• A state law tries to limit fees on checking accounts.  Your buddy says otherwise.

O.K., perhaps the buddy analogy is a bit much.  But just a bit, as the Compliance Guy quotes this regulation as the answer to a compliance question at least once a week. 

Links of Gold

Happy November, everyone.  Here at NAFCU, I have a common response to most compliance questions. 

Compliance Officer: (Insert any compliance-related question you can think of.)
Compliance Guy: I don't know, but I think I know where to find the answer.

With that in mind, please visit this page to view some of the websites that we commonly visit to find those answers.  Bookmark it, or add the sites to your favorites.  These pages are gold.  Gold, Jerry. Gold.  Does anyone else have good research sites to share?  Comment away if you do.

For those who did not get the "Gold, Jerry. Gold" reference, you may want to consider a risk-based review of your television viewing habits.  The Compliance Guy has found that many of life's pressing questions can be answered by viewing Seinfeld reruns.  The Compliance Guy's fiance is terrified by this statement.

NCUA Board Meeting

NCUA issued three final rules during its  meeting yesterday.

1. Incorporation of NCUA's Bylaws into NCUA regulations;
2. The FACT Act's Identity Theft Red Flags and Address Discrepancies Final Rule; and
3. The FACT Act's Affiliate Marketing Rule

Here's a nice, short synopsis of the Board's actions.  NAFCU is working on Regulatory Finals for these rules.  We'll have those available for our members in a few weeks.  (Note, we generally wait for final rules to be published in the Federal Register before issuing alerts, and we expect publication in the Federal Register in a week to 10 days.)

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With all of these final rules, the Compliance Guy thought that he'd talk about the beauty of the "preamble."  When an agency issues a proposed or final regulation, they do more than just issue the new regulatory text.  They give a summary, background information, and lengthy discussions about their proposal or final rule.  While it may be tempting to skip to the end of a final rule to read the new regulatory language, there are countless gems to be found in the text of the stuff I mentioned above.  (Which I call the preamble.)  Happy reading!

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Have a great weekend.  If he can get his chores done, the Compliance Guy will be watching this and this.  Be safe.

A Little ODP, from the BOA

NAFCU has a wonderful service for members.  It is our Book of Answers. (NAFCU Log-in needed.) We took the questions and answers from our monthly Compliance Newsletter and BSA Blast, and we organized them by subject matter.  We have quite a few questions and answers. Fifty-two pages worth, to be exact. The Compliance Guy can't give this stuff away, as it is a NAFCU member benefit.  And their dues help pay my salary, which pretty much all goes for popcorn at Nationals games. But for you non-NAFCU folks, here's a snippet of what the Book of Answers, a.k.a.  BOA.

Question: Does my credit union’s board of directors need to approve our credit union’s overdraft protection (bounce protection) program?

Answer: According to NCUA’s Automated Integrated Regulatory Examination Software (AIRES), yes. NCUA’s regulations permit credit unions to establish bounce protection programs. 12 C.F.R. § 701.21(c)(3). While this regulation does not indicate whether a credit union’s board of directors must approve such programs, NCUA clarified its expectations in this area when it issued Letter to Credit Unions 05-CU-21. The guidance introduced the new AIRES Payment of Overdrafts (Bounce Protection Questionnaire. Cell A-14 directs NCUA examiners to ask the following question: “Has the board of directors established a written policy addressing the payment of overdrafts through bounce protection?” You can access 05-CU-21 at: http://www.ncua.gov/letters/letters.html.
(February 2007.)

From A to Z (well, from 5300 to Your Insured Funds to be exact)

The Compliance Guy is amazed at how many folks do not use NCUA's site map.  This web page lists all of NCUA's major internet pages alphabetically.  A stroll through the "A" section will give you the Accounting Manual, Accounting Bulletins and the AIRES Exam Software.   The "B" section gives you a link to NCUA's Bylaws page.  I could go on and on.  The site map is a great place to go when you are looking for something, but just do not know where to find it on NCUA's website.  And a quick scroll through its content may alert you to unknown gems - low-hanging compliance fruit just waiting to be picked.   For example, did you know that NCUA has a "Consumer Privacy " web page?  Probably not.  Well, go to the site map, scroll down to the "C" section, and click on "Consumer Privacy."  You'll find a wealth of information about NCUA's Privacy Rule.  The Compliance Guy uses the site map almost daily.

Welcome! (And Some Love for Google)

NAFCU is proud to present its latest offering to the credit union community - the NAFCU Compliance Blog.  NAFCU will use this blog to provide useful information to a very specific audience: the credit union compliance officer.  We're very excited to get started, and we hope you check back often.

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OK, so the Compliance Guy promised some useful information.  Since this is the first post, I guess I should deliver something.  What about Google U.S. Government search?  Regular Google searches through a lot of rubbish.  Google U.S. Government search, however, limits its searches to federal, state and local government websites.  Very useful.  In the words of Google:

Google U.S. Government Search offers a single location for searching across the U.S. government information, and for keeping up to date on government news.  You can choose to search for content located on either U.S. federal, state and local government websites or the entire Web -- from the same search box.  Below the search box, the homepage includes government-specific news content from both government agencies and press outlets.  You can personalize the page by adding content feeds on government or other topics that you're interested in.

Thank you, Uncle Google.

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On a related Google note, NCUA's search engine is now powered by Google.  In a word: better.  In two words: much better.