Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

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1. Episode topic: Interagency Statement on the Issuance of the AML/CFT Program Notices of Proposed Rulemaking

2. Date of issuance: June 28, 2024

3. Agencies involved:
   - U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN)
   - Board of Governors of the Federal Reserve System
   - Federal Deposit Insurance Corporation
   - National Credit Union Administration
   - Office of the Comptroller of the Currency

4. Purpose: To amend AML/CFT program requirements for financial institutions subject to the Bank Secrecy Act (BSA)

5. Key proposed changes:
   - New statement of purpose for AML/CFT programs
   - Risk assessment process requirements
   - Fostering innovative approaches to BSA compliance
   - Requirement for U.S. presence

6. Alignment with Anti-Money Laundering Act of 2020 (AML Act) purposes

7. Broader implementation efforts:
   - Updates to supervision and examination processes
   - Enhanced feedback loops
   - Additional AML Act reviews

8. Note that these changes are separate from the Corporate Transparency Act implementation

9. Podcast sponsored by Credit Union Exam Solutions Inc.

10. Presenter: Samantha Shares

11. Additional resource mentioned: "With Flying Colors" podcast for NCUA success tips

12. Contact for assistance: Mark Treichel (LinkedIn or marktreichel.com)

These notes capture the main points discussed in the podcast about the proposed rulemaking and its implications for financial institutions.

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• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

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Federal Credit Union Loan Interest Rate Ceiling

In this episode, Samantha Shares delves into the NCUA's new proposed rule on the Federal Credit Union Loan Interest Rate Ceiling that was voted on at the July 18th Board Meeting. With a vote of 3-0, the proposed rule has been passed, maintaining the temporary 18 percent interest rate ceiling for loans made by federal credit unions. Join us for an in-depth discussion featuring real audio from the meeting, including detailed analyses, historical contexts, and the implications for credit unions and their members.

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

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• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

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Proposed Rule on Incentive-Based Compensation Arrangements

In this episode, Samantha Shares discusses the NCUA’s new proposed rule on Incentive-Based Compensation Arrangements, voted on during the July 18th Board Meeting. The episode includes a detailed presentation by various board members and staff on the scope, requirements, and implications of the proposed rule, as well as a debate among the board members regarding its enactment.

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

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• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

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Proposed Succession Planning Rule: July NCUA Board Meeting

This episode covers NCUA’s new proposed rule on Succession Planning discussed at the July 18th Board Meeting. The rule aims to improve the preparation and transition processes within credit unions by mandating formal written succession plans. The conversation includes insights from key staff and board members, and notes the rationale behind the proposal, as well as the expected benefits and concerns raised.

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

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Hello, this is Samantha Shares. This episode covers N C U A’s Enforcement Manual on Letters of Understanding and agreement – also known as L U A’s.

The following is an audio version of that advisory and the press release.    This podcast is educational and is not legal advice.  We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union  Administration experience.  We assist our clients with N C U A so they save time and money.  If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM.  Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.

And now the Enforcement manual on L U A’s.

What is a Letter of Understanding and Agreement?

An L U A is a bilateral document signed by the credit union's board of directors and the regional director (RD). The credit union agrees to take, or not take, a certain specified action(s). RDs often issue L U As when credit unions have not adequately responded to less severe measures, such as Documents of Resolution. N C U A also requires L U As for newly chartered credit unions and for the granting of permanent special assistance.

Delegation of Authority SUP 16 authorizes RDs to enter into L U As with elected and appointed officials of FCUs and FISCUs. RDs discuss and negotiate publication with credit unions to prevent unfair surprises to credit unions and their officials. The

RDs will address the issue of publication in every L U A between N C U A and a credit union by including one of the following three provisions:2

1.        This L U A will not be published.

2.        This L U A will be published.

3.         The RD is reserving for a reasonable time his/her right to publish this L U A.3•

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2 Minor modifications and variations of the listed provisions that clearly communicate the same ideas are acceptable.

3 This third provision can also specify the period of time within which the RD will decide whether to publish the L U A or can correlate publication to a specified event (or the failure of an event to occur).

a.    Required Letter of Understanding and Agreement provisions

This section is redacted.

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b.    Published Letter of Understanding and Agreement

The FCU Act §206(s)(1)(A), 12 U.S.C. §1786(s)(1)(A), requires the N C U A Board to publish and make available to the public "any written agreement or other written statement for which a violation may be enforced by the Board unless the Board, in its discretion, determines that publication would be contrary to the public interest." L U As must be published if violations are to be considered enforceable. The N C U A Board may take administrative actions against credit unions or officials when they fail to meet terms of published L U As. Violations of the terms of a published L U A alone are grounds for administrative action and, although not required, the L U A should include language to that effect as stated above.

N C U A may enforce a published L U A by bringing an enforcement action, such as a cease and desist order or civil money penalty, and proving noncompliance with the published L U A.

These publication requirements apply to all L U As, including those issued to newly chartered credit unions, as well as those issued in connection with special assistance. N C U A may take an enforcement action, even if the L U A is not published, if the credit union fails to comply with the terms of the L U A and the credit union's conduct constitutes a material safety and soundness violation or violation of law or regulation.

While not required by the delegation, the regions should provide the Office of General Counsel and E&I with a draft of an L U A considered for publication two business days prior to its delivery to the officials of the credit union for signature.

c.    Non-Published Letters of Understanding and Agreement

Non-published L U As are not enforceable. The mere violation of a non-published L U A is not grounds for a formal enforcement action, but may serve as the basis for developing grounds for a formal enforcement action if underlying safety and soundness concerns or violations of statutes or regulations exist.

The FCU Act provides that N C U A may enforce the terms of an unpublished L U A if the N C U A Board approves non-publication based upon a finding that publication would be contrary to the public interest. If the RD recommends to the N C U A Board that an L U A not be published because publication would be contrary to the public interest, and the N C U A Board issues this determination, the L U A will still be enforceable. The RD's recommendation must clearly show why publication would be contrary to the public interest. The FCU Act requires a quarterly written report to Congress to summarize all non-published L U As that are enforceable under this exception. This exception to publication should be used rarely and only when conditions justify a conclusion that non-publication is in the public interest.

d.    L U As with Federally Insured State-Chartered Credit Unions (FISCUs)

N C U A may independently or jointly with the S S A’S issue an L U A to a FISCU. The requirement for publication applies if N C U A attempts to take action based on a violation of the terms of the L U A. Therefore, RDs will include one of the three publication provisions discussed above in all L U As issued jointly with N C U A and a S S A’S

This concludes the N C U A’s   Enforcement manual on L U A’s.

If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com.  This is Samantha Shares and we Tha...

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Hello, this is Samantha Shares. This episode covers N C U A’s Enforcement Action Philosophy per its redacted Enforcement Manual. 

The following is an audio version of that advisory and the press release.    This podcast is educational and is not legal advice.  We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union  Administration experience.  We assist our clients with N C U A so they save time and money.  If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM.  Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.

And now the N C U A’s enforcement philosophy and enforcement alternatives.

What is the agency's philosophy on enforcement actions?

N C U A must deal with a credit union's problems before they become fatal. Success requires appropriate action and timing. It also requires clear communications between N C U A and the credit union's senior management and board of directors. Enforcement actions focus special attention on the problems or weaknesses and prompts corrections by credit union officials and management. Once N C U A staff identifies and communicates problems or weaknesses to the credit union, senior management and the board of directors are to correct them promptly.

The examination report is the first step in determining if an enforcement action is necessary. The actions a credit union takes or agrees to take in response to the examination report will help determine whether to take enforcement action and if so, what type.

Enforcement actions may be taken as a result of findings in an examination report or other supervision contact. Field staff need not wait for the completion of the formal examination or follow-up examination report to initiate these actions.

This manual provides guidance in selecting the action or combination of actions best suited to accomplish corrective or remedial measures. The manual also promotes consistency while preserving flexibility for specific circumstances. N C U A's long-term supervision strategy takes into consideration not only the measures needed to address the credit union's problems currently but also what measures will be needed in the future if the credit union's problems develop into serious supervisory issues threatening viability.

Certain types of enforcement action may also provide better transitions to more severe supervisory responses later if the condition of the credit union warrants. This manual provides guidance on the long-term strategy aspects of documentation for enforcement actions. The documentation of earlier enforcement actions, of failure to comply, and of the consequences for the credit union of that failure is an important part of establishing the record for more severe subsequent action.

1.       What enforcement actions are available?

Enforcement actions fall into two broad categories: informal and formal.

a.    Informal enforcement actions

Use Informal enforcement actions when a credit union's overall condition is sound, but written commitments from the board of directors is needed to ensure that it will correct problems and weaknesses identified by N C U A staff. These enforcement actions provide a credit union with more explicit guidance and direction than is normally contained in an examination report. Agreement to an informal action is evidence of the board's commitment to correct problems before they hurt the credit union's performance or cause further decline in its financial condition.

Regional directors (RD) are delegated the authority to issue informal enforcement actions. Informal enforcement actions are:

►   Regional director letters.

►   Non-published letter of understanding and agreement.

►   Establishment of special reserves

►   Preliminary warning letters.

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b.    Formal enforcement actions

The N C U A may use a wide variety of formal enforcement actions to support its supervisory objectives. Unlike most informal actions, formal enforcement actions are authorized by statute (mandated in some cases), are generally more severe, and are disclosed to the public. Also, formal actions are enforceable through other formal enforcement actions, such as the assessment of civil money penalties, and

may require litigation before an administrative law judge or a federal district court. Formal actions against a credit union are:

►   Published letters of understanding and agreement.

►   Cease and desist orders.

►   Civil money penalties.

►   Prompt Corrective Action (PCA) directives.

►   Termination of insurance.

►   Conservatorship.

►   Liquidation.

2.    How do I determine the appropriate type of enforcement actions to use?

Tailor the enforcement action to the institution. Design an action to correct deficiencies and return the credit union to a safe and sound condition as soon as possible. Normally start with the lowest level of enforcement needed to correct the credit union's problems. Enforcement actions normally rise from informal to formal as the administrative record develops, but you may start with formal actions.

Determining the appropriate informal or formal action depends on:

►   The overall condition of the credit union (both current and projected).

►   The severity of the credit union's weaknesses.

►   Whether the board and management demonstrate the commitment and ability to correct the weaknesses.

►   The existence of previously identified but unaddressed weaknesses.

►   The credit union's composite CAMEL rating.

If a credit union fails to comply with an informal enforcement action within the specified time and doesn't justify the delay, promptly proceed with a formal enforcement action.

If a credit union fails to comply with a formal enforcement action, use even stronger actions, such as:

►   Assessing civil money penalties against the board of directors and credit union management.

►   Enforcing the action in federal court.

►   Starting a new enforcement action such as...

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Hello, this is Samantha Shares. This episode covers N C U A’s Enforcement Manual Section on Removal of Officials.

The following is an audio version of that advisory and the press release.    This podcast is educational and is not legal advice.  We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union  Administration experience.  We assist our clients with N C U A so they save time and money.  If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM.  Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.

And now the N.C.U.A. enforcement manual on removal of officials.

What is an NCUA “ removal” action?

A removal action is the administrative action to remove directors, officers, or committee members. This action is available as an initial course of action or as a continuation of a cease and desist order if the officials refuse to comply as directed. Whether this enforcement action is an initial course or a continuation of a cease and desist order, it is separate and has its own applicability to particular situations. Section 206(g) of the FCU Act, 12 U.S.C. section1786(g), contains NCUA's authority to issue a removal order; NCUA Rules and Regulations section747, Subpart A, contains the rules and regulations governing removal administrative hearings.

It may become necessary to initiate formal removal action where a breach of fiduciary duty occurs on the part of the director, officer, or committee member and where the credit union's board will not or cannot discharge the responsible person and where that person does not voluntarily resign.

Removal of a director, an officer, or a committee member is not anticipatory in nature as in a cease and desist action. Removal is appropriate only when an official committed an act that constitutes grounds for removal, i.e., it cannot be imposed for future or threatened conduct. Removal can follow only if NCUA has issued a Notice of Intent to Remove or a Notice of Suspension and Intent to Remove and after completion of the appropriate administrative proceedings as provided in the FCU Act and NCUA Rules and Regulations.

NCUA may remove a person even if they voluntarily resign or are terminated by the credit union. A removal action may be brought any time up to six years after resignation, termination of employment, liquidation, or any other termination of a relationship with the credit union (see section206(k)(3) of the FCU Act, 12 U.S.C.

section1786(k)(3)).

Any party who has been removed or suspended from office is also automatically removed, suspended, and prohibited from participating in the affairs of any federally insured financial institution without the express written consent of the appropriate regulatory authority.

1.    What are the grounds for removal of an official?

NCUA can remove from office any directors, officers, or committee members if:

They directly or indirectly violated one of the following:

►     A statute or regulation.

►     A provision of a Final C&D Order.

►     Any published written agreement between the NCUA Board and the credit union.

►     Any condition imposed in writing by the NCUA Board related to granting any application or request by the CU (e.g. application for insurance or 208 Assistance).

►     Engaged or participated in any unsafe or unsound practice related to the credit union.

►     Committed or engaged in any act, omission, or practice constituting a breach

of fiduciary duty.

And

Their actions either:

►     Involved personal dishonesty.

►      Demonstrated their unfitness to participate in the credit union's affairs.

And

Their actions resulted in at least one of the following:

The credit union has or will suffer financial loss or other damage.

The interests of the members have or could be prejudiced.

The party receives financial gain or others benefit because of the violation, practice, or breach

This concludes the NCUA Letter to credit unions on TOPIC  

If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com.  This is Samantha Shares and we Thank you for listening.

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

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NCUA issued its Annual Cybersecurity and Credit Union System Resilience Report today.  It is long but worth listening to in this "real time" release of an audiobook version of the Report.

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

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Here is a link to the entire document:

https://www.occ.treas.gov/publications-and-resources/publications/semiannual-risk-perspective/index-semiannual-risk-perspective.html

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.

www.marktreichel.com

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Uses, Opportunities, and Risks of Artificial Intelligence in the Financial Services Sector

https://home.treasury.gov/system/files/136/Treasury-AI-RFI-financial-sector-2024.pdf?utm_medium=email&utm_source=NCUAgovdelivery

https://www.linkedin.com/in/mark-treichel/

Are you worried about an NCUA exam in process or looming on the horizon? Don't face it alone!

We're ex-NCUA insiders with decades of experience, ready to guide you to success. Our team understands the intricacies of NCUA examinations from the inside out.

Hire us and gain:

• Peace of mind during your exam process

• Insider knowledge of NCUA procedures and expectations

• Strategies to address potential issues before they become problems

• Continuous access to our extensive subject matter expertise

With our access retainer, you'll have on-demand support from former NCUA experts. We're here to ensure your credit union achieves flying colors in its next examination.

Contact Credit Union Exam Solutions today to learn more about our services and how we can help your credit union succeed.