Compliance Update with Amy K
by Amy Kleinschmit
Chief Compliance Officer

Virtual Hike the Hill

It is vital that Dakota credit unions continue to voice their concerns and issues to our regulators and elected officials even as we navigate operations during a pandemic. Our annual Hike the Hill event to Washington DC has been adjusted for the current situation and is now a virtual event. This virtual gathering will provide credit union professionals the opportunity to meet with key personnel from the NCUA and CFPB and with our federal elected officials. Continuing to share the stories of how the decisions made in Washington DC impact your members is needed for a strong advocacy front.

We have meetings scheduled with the CFPB on September 15 at 1:00 p.m. CT and NCUA Board Member, Todd Harper on September 18 at 9:00 a.m. CT. Register for one or both meetings here. The meeting link and agenda will be provided prior to the meeting. Please note, the Legislative Hike the Hill meetings will be announced once finalized and registration will occur through a different link.


Updated NCUA Supervisory Priorities

The NCUA recently issued an update to its 2020 Supervisory Priorities which can be found here. Please be sure to read these in their entirety as there is a lot of good information on what to expect during your next exam. There have been enough surprises in 2020, no need to be surprised on an exam when the NCUA lists what they will be looking at.

COVID did not bump BSA out of the first spot on the list and with all the scams and fraud that credit unions are seeing, BSA obviously remains very critical. The NCUA will continue focusing on proper filing of SARs and CTRs, as well as reviews of bi-weekly 314(a) information requests from FinCEN.

Compliance with the CARES Act is now #2 on the updated list of supervisory priorities. The CARES Act included several provisions that impacted credit unions, such as changes in the requirements for reporting loan modifications related to the COVID-19 pandemic to the credit reporting agencies.

Regarding credit risk management and ALLL, the NCUA is shifting its emphasis to reviewing actions taken by credit unions to assist borrowers facing financial hardship. The NCUA will also review the ALLL accounts to address the pro-cyclical effects of economic downturns.

Also, expect NCUA examiners to review credit union policies and the use of loan workout strategies, risk management practices, and new strategies implemented to assist borrowers impacted by the COVID-19 pandemic, including new programs authorized through the CARES Act. In particular, examiners will evaluate a credit union’s controls, reporting, and tracking of these programs. Examiners will also ensure credit unions have evaluated the impact of COVID-19 pandemic decisions on their capital position and financial stability.

Examiners will continue to review liquidity risk management and planning in all credit unions, and will place emphasis on:

  • The effects of loan payment forbearance, loan delinquencies, projected credit losses and loan modifications on liquidity and cash flow forecasting;
  • Scenario analysis for changes in cash flow projections for an appropriate range of relevant factors (for example, changing prepayment speeds);
  • Scenario analysis for liquidity risk modeling, including changes in share compositions and volumes;
  • The potential effects of low interest rates and the decline of credit quality on the market value of assets, funding costs and borrowing capacity; and
  • The adequacy of contingency funding plans to address any potential liquidity shortfalls.

Advertising Reminder

Just a reminder regarding Truth In Saving Act (TISA)’s requirements regarding the use of synonyms. 12 CFR 707.2 commentary discusses examples of what can and cannot be used in describing accounts. Account, for purposes of TISA means “a share or deposit account at a credit union held by or offered to a member or potential member. It includes, but is not limited to, accounts such as share, share draft, checking and term share accounts. For purposes of the advertising regulations in §707.8, the term also includes an account at a credit union that is held by or offered by a share or deposit broker.”

As discussed in the commentary to 12 CFR 707.2(a), it is not the purpose of part 707 to prohibit specific descriptive terms for accounts. For example, credit unions can use adjectives and trade names to describe accounts such as “Best Share Draft Account,” or “Ultra Money Market Share Account.” Synonyms for share, share draft, money market share, and term share accounts may be used to describe various types of credit union share and deposit accounts as long as the synonym is accurate and not misleading and, for account disclosures, is used in conjunction with the correct legal term. For example, the following synonyms may be used:

  • The term “checking account” may be used to describe share draft accounts.
  • The term “money market account” may be used to describe money market share accounts.
  • The term “savings account” may be used to describe regular share and share accounts.
  • The terms “share certificate,” “certificate account,” or “certificate” may be used to describe share certificates and other dividend-bearing term share accounts.

However, under no circumstances may a credit union describe a share account as a deposit account, or vice versa. For example, the term “certificate of deposit” or “CD” may not be used to describe share certificates and other dividend-bearing term share accounts. Similarly, the terms “time account” (used in Regulation DD, 12 CFR 1030.2(u)) and “time deposit” (used in Federal Reserve Board's Regulation D, 12 CFR 204.2(c)) may not be used to describe term share accounts. Exception - North Dakota statutes allow North Dakota state chartered credit union to reference certificate of deposit, specifically, NDCC 6-06-06.1 and 6-06-06(1).

This reminder was prompted by seeing “CD” on a number of websites for federal credit unions. Remember advertising requirements also apply to websites and social media. Don’t forget our valuable resource InfoSight (free to all CUAD member credit unions) includes a number of advertising checklists, including one for deposit accounts.

Have you Registered Yet?

Make sure to get your registration in soon for the upcoming Credit Union Professional Roundtable scheduled for Jamestown, North Dakota on August 20.

Each year credit union professionals from North Dakota and South Dakota gather to discuss and learn from each other on a variety of topics. This event is open to all credit union professionals, the only requirement is a willingness to ask questions and engage in conversation with others.

The agenda is attendee driven, and so far the topic “increasing consumer loan volume” is top of mind for those that registered. What do you want to discuss with your peers? Collection issues? member education ideas? Member onboarding perhaps?

We are looking forward to another great event in Jamestown this year. This meeting is the perfect, casual setting to gain an understanding of the pressing topics and opportunities your credit union faces and issues relevant to your credit union. Register here for this great event today! And, while you are in town get some fresh air and support the Credit Union Foundation of the Dakotas at the Annual Golf Scramble!

Finally, always remember, “All the geniuses and greats are really just nerds with experience.”

~ Alexander Posey


CUAD members may contact Amy Kleinschmit with any compliance related questions.


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