Regulatory Review: Proposed Changes Put to NCUA
CUNA and NAFCU officials submit ideas for changes they’d like to see made by the NCUA.
As part of the NCUA’s annual regulatory review process, which covers one-third of its regulations, trade organizations NAFCU and CUNA submitted their ideas of ways certain regulations could be improved by the agency.
In the past week, CUNA and NAFCU filed letters with the NCUA for the 2021 Regulatory Review. In the letters, the groups agreed on three items to bring to the NCUA’s attention, while NAFCU added two more to its list.
Part 748: Security Program, Report of Suspected Crimes, Suspicious Transactions, Catastrophic Acts and Bank Secrecy Act Compliance
Both organizations asked the NCUA to coordinate with the Financial Crimes Enforcement Network (FinCEN) to come up with a solution to “minimize compliance burdens related to Bank Secrecy Act/Anti-money Laundering (BSA/AML) regulations.”
NAFCU Director of Regulatory Affairs Ann Kossachev wrote to the NCUA, “Such coordinated effort will ensure that the resources and personnel credit unions devote to BSA-related regulatory compliance are allocated accordingly.”
Part 749: Records Preservation Program and Appendices
This regulation portion requires credit unions to maintain a records preservation program “to identify, store and reconstruct vital records in the event that the credit union’s records are destroyed.”
CUNA asked the NCUA “to revisit the permanent records detailed in Appendix A to the regulation, which provides guidance concerning how long credit unions should retain certain records.”
CUNA Senior Director of Advocacy and Counsel Luke Martone said, “We question the need to maintain such records permanently; particularly for accounts that have been closed for decades. This is an issue since many credit unions do not have the physical space to store such records nor the money to pay a storage facility vendor to store these records forever.”
Kossachev said, “NAFCU recommends that record retention requirements align with statutes of limitations, varying based on product and information type. Additionally, it would be helpful for the NCUA to specify that record retention requirements align with state laws.”
Part 760: Loans in Areas Having Special Flood Hazards
This particular regulation concerns interagency flood insurance requirements for loans secured by buildings or structures in areas having special flood hazards.
In the letter, NAFCU recommended that the “NCUA provide more flexibility with respect to the delivery and timing of required notices.” Meanwhile, CUNA encouraged the agency to consider placing interagency questions and answers concerning flood insurance in the appendix to Part 760. “CUNA believes this would make it easier to locate, less reliant on access to (the) NCUA’s website and provide certainty that the guidance is the most recent version,” the letter stated.
Part 750: Golden Parachute and Indemnification Payments
This regulation bars “golden parachute payments” by federally-insured credit unions that have become insolvent or in conservatorship, except under specific circumstances. In its letter to the NCUA, Kossachev said there should be some flexibility when it comes to paying out credit union executives. “NAFCU believes that severance should be an allowable claim in liquidation and disagrees that executive claims should be treated differently than other employee claims if they are separately negotiated. Credit union staff should have certainty that the terms of their employment agreement will be honored, even if the credit union enters involuntary liquidation,” she wrote.
Part 792: Requests for Information under the Freedom of Information Act and Privacy Act, and by Subpoena; Security Procedures for Classified Information
In its final regulatory request, NAFCU urged the NCUA to be more transparent with its approach to Freedom of Information Act (FOIA) requests. FOIA requests can be filed by people, organizations and the media to public agencies, such as the NCUA, to request information that might not be publicly available.
NAFCU asked the NCUA to reduce its reliance on FOIA exemptions, which are reasons given to deny a FOIA request. “NAFCU urges the agency to view FOIA requests through the lens of transparency to disclose as much information as possible so that credit unions understand how the NCUA is making use of credit union dollars and operating to ensure the safety and soundness in the industry,” Kossachev wrote.