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Compliance Update with Amy K by Amy Kleinschmit, Chief Compliance Officer CFPB Final Interpretive Rule – Regulation B As credit unions are aware, the Equal Credit Opportunity Act (ECOA) as implemented by Regulation B, makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction,” on several enumerated bases, including “on the basis of . . . sex . . .” The CFPB recently announced an interpretive rule to address any regulatory uncertainty that may still exist under ECOA and Regulation B as to the term “sex” so as to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities and to ensure that consumers are protected from discrimination. The interpretative rule provides that with respect to any aspect of a credit transaction, the prohibition against sex discrimination in the ECOA and Regulation B, which implements ECOA, encompasses sexual orientation discrimination and gender identity discrimination, including discrimination based on actual or perceived nonconformity with sex-based or gender-based stereotypes and discrimination based on an applicant’s associations. As stated in the accompanying press release, “In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” said CFPB Acting Director David Uejio. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.” FinCEN Notice The Financial Crimes Enforcement Network (FinCEN) recently issued notice FIN-2021-NTC2 relating to trade in antiquities and art. The Notice alerts financial institutions, which includes credit unions, to be aware that illicit activity associated with the trade in antiquities and art may involve their institutions. Crimes relating to antiquities and art may include looting or theft, the illicit excavation of archaeological items, smuggling, and the sale of stolen or counterfeit objects. This notice goes on to detail how to complete a SAR should it become necessary include tips for completing the narrative portion of the SAR. NCUA FREE Webinar – Credit Risk Related to COVID-19 The NCUA will be hosting a free webinar on March 24 about potential areas of credit risk resulting from the COVID-19 pandemic. Online registration for the “Pandemic-Related Credit Risks for Credit Unions” webinar can be found here. The webinar is scheduled to begin at 2 p.m. Eastern and run approximately for 60 minutes. Topics that will be covered during the webinar include: Credit markets’ status; Current federal regulations; What NCUA examiners look for; Suggestions on reporting risk to a credit union’s management and board; and Advice for proactively managing credit risks. As you will recall, the 2021 NCUA Supervisory Priorities include credit risk management – so this might be a good webinar to catch. Per the supervisory priorities letter to credit unions, “NCUA examiners will continue to place emphasis on the review of credit unions’ loan underwriting standards and credit risk-management procedures. NCUA examiners will focus on any adjustments credit unions made to lending programs to address borrowers facing financial hardship because of the COVID-19 pandemic. NCUA examiners will also focus on reviewing policies that address the use of loan workout strategies, risk-management practices, and new strategies implemented to provide funds to borrowers impacted by the COVID-19 pandemic, including programs that were authorized under the CARES Act and extended in the Consolidated Appropriations Act, 2021. In particular, NCUA examiners will evaluate credit unions’ controls, reporting, and tracking of these programs. NCUA examiners will also verify that credit unions evaluated the potential impact their COVID-19 response and relief efforts will have on their capital position and financial stability. Credit unions must demonstrate they understand and are continually evaluating credit risks specific to this crisis. Credit unions’ risk-monitoring practices should be commensurate with the level of complexity and nature of their lending activities. Credit unions should maintain safe and sound lending practices and comply with consumer disclosure and regulatory reporting requirements.” UMACHA Virtual Symposiums UMACHA has two upcoming virtual symposiums designed to bring timely information to credit union professionals on fraud and compliance. March 16 – Fraud Symposium in conjunction with WesPay. UMACHA and Wespay have partnered to bring you the 2021 Fraud Symposium, a one-day virtual conference. Bringing together leading industry experts and professionals to discuss the timely trends in payments fraud and ways to mitigate risk, especially in a faster-payments environment. Sessions will cover combatting synthetic identity theft; romance scams; fraud and real-time payments – just to name a few. Visit umacha.org to see the complete Fraud Symposium agenda, speakers, session descriptions and to register today! March 25 – Compliance Symposium. This full-day special event focuses on ACH Rules compliance and the broader regulatory landscape related to electronic payments. Join UMACHA staff and industry experts covering topics that include: Common ACH and Risk Findings; Debit Card Fraud; Risk Lessons Learned from the Pandemic; and the New Normal for Upcoming ACH Rules. The full agenda can be found here and registration information is found here. CU PolicyPro’s New Look! CU PolicyPro can help your credit union manage today’s ongoing compliance and operational challenges thanks to its more than 230 detailed model policies. Together with InfoSight, you have at your disposal a comprehensive suite of policies and regulatory compliance guidance written especially for credit unions by legal and financial experts. And, coming soon are some major updates to CU PolicyPro! The all-new CU PolicyPro will continue to provide the great model policy content you’ve come to expect but will now offer a fully redesigned policy management system! The new system includes a beautiful, modern, and easy to navigate design to help all users easily find, view and print both model policies and the credit union’s own customized policies. System admins and policy editors will now have a whole new toolbox to: create, maintain and distribute policies; assign and track policy updates and reviews; upload and share additional documents; view and confirm relevant model policy updates; and manage user access to the policy level. Here is a short video with more information about the upcoming changes to CUPolicyPro. Visit the DakCU Compliance Page to submit questions directly to Amy Kleinschmit.
Compliance Update with Amy K
by Amy Kleinschmit, Chief Compliance Officer
CFPB Final Interpretive Rule – Regulation B
As credit unions are aware, the Equal Credit Opportunity Act (ECOA) as implemented by Regulation B, makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction,” on several enumerated bases, including “on the basis of . . . sex . . .” The CFPB recently announced an interpretive rule to address any regulatory uncertainty that may still exist under ECOA and Regulation B as to the term “sex” so as to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities and to ensure that consumers are protected from discrimination.
The interpretative rule provides that with respect to any aspect of a credit transaction, the prohibition against sex discrimination in the ECOA and Regulation B, which implements ECOA, encompasses sexual orientation discrimination and gender identity discrimination, including discrimination based on actual or perceived nonconformity with sex-based or gender-based stereotypes and discrimination based on an applicant’s associations.
As stated in the accompanying press release, “In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” said CFPB Acting Director David Uejio. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.”
FinCEN Notice
The Financial Crimes Enforcement Network (FinCEN) recently issued notice FIN-2021-NTC2 relating to trade in antiquities and art. The Notice alerts financial institutions, which includes credit unions, to be aware that illicit activity associated with the trade in antiquities and art may involve their institutions. Crimes relating to antiquities and art may include looting or theft, the illicit excavation of archaeological items, smuggling, and the sale of stolen or counterfeit objects. This notice goes on to detail how to complete a SAR should it become necessary include tips for completing the narrative portion of the SAR.
NCUA FREE Webinar – Credit Risk Related to COVID-19
The NCUA will be hosting a free webinar on March 24 about potential areas of credit risk resulting from the COVID-19 pandemic. Online registration for the “Pandemic-Related Credit Risks for Credit Unions” webinar can be found here. The webinar is scheduled to begin at 2 p.m. Eastern and run approximately for 60 minutes. Topics that will be covered during the webinar include: Credit markets’ status; Current federal regulations; What NCUA examiners look for; Suggestions on reporting risk to a credit union’s management and board; and Advice for proactively managing credit risks.
As you will recall, the 2021 NCUA Supervisory Priorities include credit risk management – so this might be a good webinar to catch. Per the supervisory priorities letter to credit unions, “NCUA examiners will continue to place emphasis on the review of credit unions’ loan underwriting standards and credit risk-management procedures. NCUA examiners will focus on any adjustments credit unions made to lending programs to address borrowers facing financial hardship because of the COVID-19 pandemic. NCUA examiners will also focus on reviewing policies that address the use of loan workout strategies, risk-management practices, and new strategies implemented to provide funds to borrowers impacted by the COVID-19 pandemic, including programs that were authorized under the CARES Act and extended in the Consolidated Appropriations Act, 2021. In particular, NCUA examiners will evaluate credit unions’ controls, reporting, and tracking of these programs.
NCUA examiners will also verify that credit unions evaluated the potential impact their COVID-19 response and relief efforts will have on their capital position and financial stability. Credit unions must demonstrate they understand and are continually evaluating credit risks specific to this crisis.
Credit unions’ risk-monitoring practices should be commensurate with the level of complexity and nature of their lending activities. Credit unions should maintain safe and sound lending practices and comply with consumer disclosure and regulatory reporting requirements.”
UMACHA Virtual Symposiums
UMACHA has two upcoming virtual symposiums designed to bring timely information to credit union professionals on fraud and compliance.
March 16 – Fraud Symposium in conjunction with WesPay.
UMACHA and Wespay have partnered to bring you the 2021 Fraud Symposium, a one-day virtual conference. Bringing together leading industry experts and professionals to discuss the timely trends in payments fraud and ways to mitigate risk, especially in a faster-payments environment. Sessions will cover combatting synthetic identity theft; romance scams; fraud and real-time payments – just to name a few. Visit umacha.org to see the complete Fraud Symposium agenda, speakers, session descriptions and to register today!
March 25 – Compliance Symposium.
This full-day special event focuses on ACH Rules compliance and the broader regulatory landscape related to electronic payments. Join UMACHA staff and industry experts covering topics that include: Common ACH and Risk Findings; Debit Card Fraud; Risk Lessons Learned from the Pandemic; and the New Normal for Upcoming ACH Rules. The full agenda can be found here and registration information is found here.
CU PolicyPro’s New Look!
CU PolicyPro can help your credit union manage today’s ongoing compliance and operational challenges thanks to its more than 230 detailed model policies. Together with InfoSight, you have at your disposal a comprehensive suite of policies and regulatory compliance guidance written especially for credit unions by legal and financial experts. And, coming soon are some major updates to CU PolicyPro! The all-new CU PolicyPro will continue to provide the great model policy content you’ve come to expect but will now offer a fully redesigned policy management system!
The new system includes a beautiful, modern, and easy to navigate design to help all users easily find, view and print both model policies and the credit union’s own customized policies. System admins and policy editors will now have a whole new toolbox to: create, maintain and distribute policies; assign and track policy updates and reviews; upload and share additional documents; view and confirm relevant model policy updates; and manage user access to the policy level.
Here is a short video with more information about the upcoming changes to CUPolicyPro.
Visit the DakCU Compliance Page to submit questions directly to Amy Kleinschmit.