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NCUA’s 2019 Supervisory Priorities

The National Credit Union Administration (NCUA) issued a Letter to Federally Insured Credit Unions (No. 19-CU-01) that outlines the following primary areas of supervisory focus for 2019:

BSA
In-depth reviews of Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) policies and procedures and assessing compliance with the Customer Due Diligence (CDD) regulation.

Concentration Risk
Examiners will look at specific areas where there is a high concentration of certain loan products.  If excessive levels of credit concentration risk are identified, examiners will work with management to mitigate risk.

Consumer Compliance
Examiners will look for compliance with Regulation B adverse action notification requirements.  Examiners will also likely review overdraft policies and procedures for compliance with Regulation E.  If your credit union lends to military personnel, examiners will evaluate a credit union’s efforts to comply with the Military Lending Act (MLA).  The Home Mortgage Disclosure Act (HMDA) is also an area of focus with data collection and reviews of loan/application registers.

CECL
Examiners will inquire about efforts a credit union has taken to prepare for the new Current Expected Credit Loss (CECL) accounting standard, and whether a credit union has performed analysis for how CECL would alter the Allowance for Loan and Lease Losses funding needs. 

Cybersecurity
An area of focus this year is Information Technology (IT) risk management controls and service provider arrangements.

Liquidity/Interest Rate Risk
With likely economic fluctuations projected in 2019, and the increased use of mobile internet banking apps and non-bank financial type products, the focus will be a credit union’s ability to deal with potential challenges in retaining low cost core deposits.

 

For additional details and links to NCUA resources and guidance regarding the areas of supervisory focus, see NCUA’s Letter to Credit Unions No. 19-CU-01.

 

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