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Financial Services Law Insights and Observations

NCUA releases 2020 supervisory priorities

Federal Issues NCUA Compliance Examination Supervision Bank Secrecy Act Anti-Money Laundering Consumer Protection Privacy/Cyber Risk & Data Security LIBOR

Federal Issues

In January, the NCUA issued a letter to board of directors and chief executive officers at federally insured credit unions outlining the agency’s 2020 supervisory priorities. Top supervisory priorities include:

  • Bank Secrecy Act/Anti-Money Laundering (BSA/AML). Examinations will continue to focus on customer due diligence and beneficial ownership requirements. The NCUA will also collaborate with law enforcement and banking regulators on initiatives such as updates to the FFIEC’s BSA/AML examination manual and enforcement guidelines, guidance concerning politically exposed persons, and measures for improving suspicious activity and currency transaction report filing procedures.
  • Consumer Financial Protection. Based on a rotating regulation review cycle, NCUA examiners will review compliance (at a minimum) with the following regulations: the Electronic Fund Transfer Act, Fair Credit Reporting Act, Gramm-Leach-Bailey (Privacy Act), Payday Alternative Lending and other small dollar lending, Truth in Lending Act, Military Lending Act, and the Servicemembers Civil Relief Act.
  • Cybersecurity. In 2020 the NCUA will continue conducting cybersecurity maturity assessments for credit unions with assets over $250 million and will begin to assess those with assets over $100 million. In addition, the NCUA intends to pilot new procedures—scaled to an institution’s size and risk profile—to evaluate critical security controls during examinations between maturity assessments.
  • LIBOR Cessation Planning. Examiners will assess credit unions’ planning related to the discontinuation of LIBOR. According to the NCUA, credit unions should “proactively transition away from instruments using LIBOR as a reference rate.”

Other areas of focus include credit risk, current expected credit losses, liquidity risk, and modernization updates. The extended examination cycle will continue to apply to qualifying credit unions.

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