The new Guide replaces the 367-page Supervisory Committee Guide for Federal Credit Unions , which was most recently revised more than two decades ago in December 1999. The NCUA will continue to examine for compliance with applicable consumer financial protection regulations during every examination as established in the January 2020 Letter to Credit Unions, 20-CU-01, The NCUA’s consumer compliance reviews will now also emphasize review of the following regulatory changes enacted since the start of the COVID-19 pandemic:The scope of each examination’s consumer compliance review is largely risk-focused; based on a credit union’s compliance records, products and services provided, regulatory changes, and other emerging concerns. NCUA examiners will review credit unions’ good faith efforts to comply with the CARES Act and will take appropriate action, when necessary, to ensure credit unions meet their obligations under the new law.Multiple CARES Act provisions directly affect credit unions, including those that:For more information, see NCUA Letter to Credit Unions, 20-CU-07, The COVID-19 pandemic continues to effect consumers and could result in increased consumer compliance risk in certain areas; consumer financial protection, therefore, remains an NCUA supervisory priority. The NCUA remains committed to incorporating efficiencies into our supervision program to address the effects of the COVID-19 pandemic on credit unions and their members. The agency continues to respond with updated policies, procedures and enhancements to its supervision program.Examinations for those credit unions qualifying for the agency’s Updates to NCUA’s primary areas of supervisory focus are discussed below.The NCUA meets regularly with senior policymakers in the U.S. Department of the Treasury, the Financial Crimes Enforcement Network (FinCEN), and other federal banking agencies to improve the transparency, efficiency, and effectiveness of its regulation and supervision of BSA/AML. A federally insured credit union that is not required to obtain a financial statement audit may fulfill its responsibilities by obtaining an Other Supervisory Committee Audit. The NCUA Board temporarily increased the aggregate amount of loan participations a FICU may purchase from any one originating lender under NCUA regulation § 701.22(b)(5). For more information, visit the NCUA’s Credit unions offer, own, and are counterparties to LIBOR-based products and contracts, including loans, investments, derivatives, deposits, and borrowings. Federally Insured Credit Unions NAFCU members can expect a more detailed overview of the 2020 supervisory priorities and a round-up of related resources in an upcoming edition of our NAFCU Compliance Monitor publication . Law enforcement, intelligence, and counterterrorism officials depend on prompt reporting of any 314(a) matches and the vital information provided through timely and informative SARs and CTRs. by
The NCUA encourages credit unions to continue to assess their needs and evaluate methodologies for the eventual implementation of the CECL standard.Credit unions must still maintain an ALLL account in accordance with FASB Accounting Standards Codification (ASC) Subtopic 450-20 (loss contingencies) and/or ASC 310-10 (loan impairment). Examiners will also ensure credit unions have evaluated the impact of COVID-19 pandemic decisions on their capital position and financial stability.In addition, credit unions’ risk-monitoring practices should be commensurate with the level of complexity and nature of their lending activities, provide for safe and sound lending practices, and ensure compliance with consumer protections and regulatory reporting requirements.Further, due to the recent developments in economic conditions and the Financial Accounting Standards Board’s (FASB) decision to delay its requirement to comply with the current expected credit losses (CECL) standard until January 2023, NCUA examiners will not be assessing credit unions’ efforts to transition to the CECL standard until further notice. On July 1, 2020, the FFIEC issued a Planning for the LIBOR transition is an important operational and safety and soundness consideration for credit unions with material exposures.
The NCUA is also piloting an Information Technology Risk Examination solution for Credit Unions (InTREx-CU). In September 2019, the NCUA Board approved a final rule amending part 715 to provide additional flexibility for financial statement audits. We will continue to provide guidance as the economic impact of the pandemic evolves.If you have any questions about the updates to the NCUA’s supervisory priorities described in this letter, please contact your NCUA regional office. With these revised priorities, the NCUA is focusing its examination activities on areas that pose elevated risk to the credit union industry and the National Credit Union Share Insurance Fund given the current environment.The NCUA understands the challenges credit unions are facing during the COVID-19 pandemic. The National Credit Union Administration has issued a new guide to minimum procedures for other supervisory committee audits.
However, the agency will continue to use MERIT in 2020 and 2021 in both a pilot and limited-release capacity. Key accomplishments by the interagency working group include:The NCUA will continue communicating with credit unions, engaging with law enforcement, and collaborating with the other banking regulators on several initiatives associated with this supervisory priority, including:The NCUA will also continue focusing on proper filing of SARs and CTRs, as well as reviews of bi-weekly 314(a) information requests from FinCEN.