February 1, 2017
In This Issue
Quick Links
ComplySight: FREE Recorded Webinars
Upcoming Educational Events
February 7 & 8

For a complete listing of educational opportunities available from LCUL and to register, visit the League website and click on "Education"
Compliance Toolkit
The BSA Officer's Toolkit contains tools to help manage your institution's BSA/AML program. It is designed to help you revamp and revitalize your BSA program before the examiners arrive.

Toolkit is provided by GetTechnical Inc. 

A closer look at the MBL guidance: Section 723.4- Commercial Loan Policies 

Now that the new MBL rule is in effect, credit unions needs to ensure that they are in compliance and fully understand all of the new requirements.  The lengthy guidance that NCUA published in December as part of its online examiner's guide provides more detail about the rule and sheds some light on examiner expectations.  Earlier this month we took a closer look at the Board and Management responsibilities in section 723.3 (available  here  in case you missed it).  In this week's installment, we will take a deeper dive into the commercial loan policy guidance in 723.4.

Source: CUNA CompBlog
Compliance Q&A

Question: How often should our Commercial Loan Policy be reviewed by the Board of Directors?
Answer: This is actually addressed both within the rules and within the NCUA Examiner's Guide. Both indicate that the policy must be reviewed at least once a year and updated when warranted.  However, it should be reviewed more frequently if there is a material change in the commercial lending program or related organizational structure or any material change in portfolio performance or economic conditions.
Question: What are the new experience requirements for staff involved in commercial lending?

Answer: There are separate requirements for Senior Management staff who oversee the commercial lending function and lending personnel.

Senior Management
According to the Examiner's Guide, it is essential that senior management have a comprehensive understanding of the credit union's commercial lending activities and the ability to adequately oversee the management of the risks associated with those activities. They must ensure the credit union implements appropriate risk management processes to measure, monitor and control risks. Staff involved in the commercial loan program must have sufficient expertise in assessing and managing the risks associated with the type of commercial lending in which the credit union is engaged. Their skills should be commensurate with the position and level of responsibility.

Managers responsible for a credit union's commercial lending program should have demonstrated experience in:
  • Overseeing commercial credit risk assessment and underwriting;
  • Managing and administering a credit risk rating system;
  • Managing a commercial loan portfolio and being held accountable for the risk in that portfolio; and
  • Managing commercial lenders and other risk managers.
Qualified Lending Personnel
The NCUA examiners will primarily focus on the overall type and relevance of staff experience for those individuals involved in the commercial loan program, with an emphasis on experience in commercial loan risk management (do you see a trend here?). 

The credit union's staff should have:
  • Experience directly related to the specific types of commercial lending in which the credit union is engaged;
  • Demonstrated experience in conducting commercial credit analysis and evaluating the risk of a borrowing relationship using a credit risk rating system;
  • Demonstrated experience in underwriting, processing, and conducting workout activities for the types of commercial lending in which the credit union is engaged; and
  • Knowledge of the legal documentation necessary to protect the credit union from legal liability, and all relevant law and regulation impacting commercial lending activities.
Source: CU PolicyPro
Back-2-Basics: Responding to a date breach

Cybersecurity remains a top priority for regulators and the entire financial services industry. The Federal Financial Institutions Examination Council (FFIEC) agencies introduced a  cybersecurity assessment tool  in 2015 to help institutions determine their level of cybersecurity preparedness. Use of the tool by credit unions is recommended but voluntary,  although it is being incorporated into NCUA's exam process later this year   (3rd or 4th Quarter 2017).

Source: CU Compliance Community
CFPB announces release of Small Entity Compliance Guide for Prepaid Rule 

On January 31, 2017 the CFPB released the Small Entity Compliance Guide for their Prepaid Rule, designed to help credit unions determine their  compliance obligations for prepaid accounts. This guide isn't a substitute for reviewing the Prepaid Rule, but can help you get started.

Source: CFPB
Content update for CU PolicyPro Operations Manual announced 

This update includes fourteen policy updates. A full listing of the updated policies can be found in the " Update Overview " document. 

The tracked changes version of each update can be found in the Resources Area of CU PolicyPro (under the "Updates" tab). There is also a full word version of the new policy that mirrors the content found in the online Model Policies Manual. It is important to note that when updates are made to the Model Policies Manual, these updates do not automatically go into your CU Policies Manual. We do not want to take the chance of overwriting your content, or putting in content that may not apply to your credit union. 

For more information on the next steps necessary to incorporate the updates into your own policies, please visit the CU PolicyPro Support website.

If you have any questions, please contact the CU PolicyPro support team at policysupport@cusolutionsgroup.com.
InfoSight Highlight- Advertising Deposit Accounts

All deposit advertisements should include either the NCUA official sign or an abbreviated statement, both of which can be found in Section 740 of NCUA Rules & Regulations.
A Credit Union can choose one of the following options to comply with this Regulation:
  1. Use the statement, "This Credit Union is federally-insured by the National Credit Union Administration." 
  2. Use the short statement, "Federally Insured by NCUA"; or 
  3. Display the official sign in their advertisements.
The official advertising statement must be in a size and print that is clearly legible. However, if the NCUA official sign in the advertisement is so small that the NCUA's sign and the two lines of small type become indistinct, the credit union should use the NCUA official advertising statement or the short statement.
It should be credit union policy to:
  • Not use any misleading or inaccurate advertisements; 
  • Include specific rate information whenever rates are included in advertisements; 
  • Provide additional information in advertisements that contain or advertise information about rates or bonuses; and 
  • Not state that a deposit with the credit union is safer than a deposit with an insured savings and loan association or bank.
What do credit unions have to do to comply with the advertising rules?
If a deposit account advertisement will state a rate of return, the advertisement must reflect the rate as an "annual percentage yield", using that term. A credit union may also use the abbreviation "APY", as long as the full term "annual percentage yield" appears at least once in the advertisement.
The only other rate that a credit union can include in a deposit advertisement is the dividend rate related to the APY. A credit union must use the actual term "dividend rate". It must appear with the APY and cannot be shown more conspicuously. Deposit advertising should not include the term "annual percentage rate" in any context.
For additional information,  click here for the topic.