Posted: Dec 13, 2018
Categories: Regulations, Consulting
Comments: 0

Trellance’s Compliance Corner, a thought leadership spotlight on topics relevant to compliance officers and credit union executives, has covered a lot of ground in 2018.

Back in January, we noted that Reg Z fees, which dictate the maximum a credit union can charge for penalty fees, such as late fees,  remained the same from 2017.

In March, we covered CECL, or Current Expected Credit Loss, a new accounting standard which will result in most credit unions increasing loan loss reserves by looking forward and predicting the potential for write-offs. This is an area where data analytics can help credit union executives make more accurate predictions, thus lowering the need for high reserves.

In April, we warned of an upcoming change to a new FINCen rule, which requires covered financial institutions to identify and verify the identity of any beneficial owner. This new Customer Due Diligence (CDD) rule, which took effect May 11, 2018, requires federally-regulated financial institutions to identify and verify the identity of customers; understand the nature and purpose of customer relationships; and conduct ongoing monitoring to maintain and update customer information, as well as identify and report suspicious transactions.

The month of May saw new rules related to mobile Remote Deposit Capture, mRDC. The change specifically addressed “double presentment,” which happens when a member deposits a check via RDC, then cashes the same check elsewhere.

July’s Compliance Corner covered the importance of having an ADA compliant website. The article touched on some critical factors to note to ensure you have an accessible site. And mentioned lawsuits that were brought against companies with sites that were deemed non-compliant and what credit unions can do to ensure that they are covered from additional scrutiny.

Also in July, though not specifically in the Compliance Corner, we discussed beneficial changes made by the NCUA  to Member Business Loans (MBL). These changes make it easier for credit unions to offer loans to SMBs. 27 amendments were announced by the NCUA, among them was a new definition of what is to be counted toward the MBL “cap” of 12.5% of assets, the elimination of the need for waivers, relaxing of specific staffing requirements, and an exception carved out for credit unions below $250,000 in assets.

In November, we shared the CFPB’s direction to clarify rules surrounding the Unfair, Deceptive, and Abusive Acts or Practices (UDAAP) as it has remained broad in scope for many years.

And in December we presented two areas where regulators are changing rules to help credit unions and community banks. One is to allow different financial institutions to collectively pool resources for anti-money laundering monitoring and reporting. The second is increasing the threshold for when a full appraisal is required for real-estate transactions, from $250,000 to $500,000; in both cases alleviating expensive and time-consuming burdens. 

What’s to Come?

  • Some of the issues facing credit unions in 2018 are still being fought in court – the ADA website lawsuits being one of them and we anticipate that they will continue in 2019.
  • The Department of the Treasury is seeking to reform the Community Reinvestment Act (CRA), which requires credit unions (and banks) to serve the credit needs in their communities. Treasury is directing the Office of the Comptroller of the Currency (OCC) to seek public comments on, among other aspects, assessing alternative channels that exist for providing banking services.
  • Changes to the Dodd-Frank Act remain a possibility, although the chance of reform has grown significantly dimmer with Democrats taking over the U.S. House.
  • Consumer data protection rights, such as GDPR, which was put into law in Europe earlier this year, is unlikely to be seen in the U.S at the federal level. However, it is very likely that states will take up this role. As an example, California passed a consumer privacy act, which established data protection rights for consumers.
  • In mid-December 2018, the NCUA Board is set to hear the regulatory reform report, which will be developing in 2019. Some of the regulations being discussed are:

A proposal to update, clarify and simplify the Federal Credit Union (FCU) Bylaws. The Board is also proposing changes that will update the FCU Bylaws so that they conform with legal opinions issued by the NCUA’s Office of General Counsel and/or provide greater flexibility to FCUs.

The Board also proposes to amend its regulations regarding loans and lines of credit to members. The proposal would reduce the regulatory burden by making amendments to improve clarity and to make compliance easier. Specifically, the Board proposes to make the NCUA’s loan maturity requirements more user-friendly by identifying in one section, all the various maturity limits applicable FCU loans. Additionally, the Board proposes to make explicit in its regulations that the maturity date for a ‘‘new loan’’ under generally accepted accounting principles (GAAP) is calculated from the new date of origination. And it seeks to comment on whether the agency should provide longer maturity limits for 1–4 family real estate loans and other loans permitted by the FCU Act, such as home improvement, mobile home, and second mortgage loans. Finally, the Board proposes to more clearly express the limits for loans to a single borrower or group of associated borrowers.

The primary author of the Compliance Corner and frequent contributor of content to several credit union-specific organizations is Trellance Director of Consulting Services, Dave Chojnacki. Dave holds a Credit Union Compliance Expert (CUCE) Designation from CUNA and can be reached at if you need any help with compliance issues.

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Dave Chojnacki

Dave ChojnackiDave Chojnacki

Dave has more than 10 years of relationship management experience and holds a Credit Union Compliance Expert (CUCE) Designation from CUNA. He currently serves as Director of Consulting Services at Trellance.

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