WASHINGTON — CUNA and NAFCU applauded NCUA's attempt to make its suspicious activity reporting regulations more clear and consistent with others, but more needs to be done to clean them up.
In separate comment letters, CUNA and NAFCU both found additional places where NCUA's SAR filing guidelines could use further clarity. "Greater uniformity with the other SAR regulations would increase efficiency and help foster compliance; as such, NAFCU generally supports the proposed changes," NAFCU Senior Vice President of Government Affairs Dan Berger wrote. "We are not convinced, however, that notification of the board of directors should be required by regulation at this time."
NAFCU's concern is that while board notification of SARs is common practice, it is not statutorily required nor is it in Treasury's Bank Secrecy Act rules. The situation can get particularly sticky as to how to handle notification when the report involves a board member or senior management, which can tip off the person reported on or cast a suspicion on them when the report is entirely innocuous.
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Additionally, NAFCU asked that definitions be included for certain words and phrases in the rule.
CUNA made a few specific requests for clarification of items in the rule. First, Senior Regulatory Counsel Catherine Orr asked that flexibility in the format of the filing be spelled out in the reg. "We believe that a mandate for the reports to reference the names or confidential information of the suspected individuals in each SAR filing would be contrary to the intent behind BSA," she wrote. "Further, revealing such information in the reports could result in damage to the reputation of the named individuals and/or the credit union."
Orr also recommended that the term "designated committee" be clarified in terms of notification of the SAR filings.
She pointed to a number of areas that CUNA often fields questions about under BSA, including:
o NCUA's expectations for systems required to identify suspicious transactions and to monitor accounts for suspicious activity, including structuring;
o How long, under Financial Crimes Enforcement Network guidelines suggesting that institutions report continuing suspicious activity by filing a report at least every 90 days, credit unions should file follow-up SARs; and
o Disclosure of SAR supporting documentation to police or other authorities as it seems to contradict the proposed provision on confidentiality of reports and appropriate procedures when declining to produce information in response to a subpoena or court order.
Pennsylvania Credit Union Association Associate Counsel Laurie Kennedy also had a question about tracking, monitoring, detection and suspicious activity reports related to possible money laundering and terrorism financing, though not directly addressed in NCUA's proposed regulation. "Credit union management has generally expressed frustration in determining what criteria should be applied and what information should be collected and included in the reports to satisfy this somewhat elusive requirement," she said. "Our credit unions have received different advice and instruction that has been dependent upon the individual field officer/examiner assigned to review the credit union's operations and policies."
The proposal also does not offer enough clarification, according to Kennedy, and NCUA should outline when reports must be made and in what they should include. PCUA members said an annual report should be sufficient. –[email protected]
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