Compliance News Corner

While the ultimate goal is to prevent or mitigate burdensome regulations, the reality is that regulation never stops, and therefore the need for credit unions to comply won’t either. The League remains a constant source for your credit union to understand rules and regulations that impact you.

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In the News

Two-Factor Fraud: Threat of the Week

The threat report from Japanese security company Trend Micro was blunt. Two-factor authentication was successfully compromised by criminals and the victims were customers of 34 different financial institutions in Japan, Switzerland, Austria and Sweden.  No U.S. institutions were  known to have been compromised in this attack that Trend Micro  dubbed Emmental because, the company said, digital banking protections are “full of holes.”

What was especially startling to security experts was that the attack made a mockery of two factor authentication – and at least some said the insecurity of SMS-based two factor is baked in and more compromises can be predicted. More on that momentarily.  First, about this attack in particular.

“It was revolutionary because it compromised multiple platforms,” JD Sherry, a Trend Micro vice president said.  Read full article in Credit Union Times

Mortgage Rule and Lawful Marriage Clarifications

A clarification has been issued to mortgage lending rules that states when a borrower dies, the name of the borrower’s heir generally may be added to the mortgage without triggering the Consumer Financial Protection Bureau’s ability-to-repay rule. The clarification, issued by the CFPB, is meant to help surviving family members who acquire title to a property to take over their loved one’s mortgage.

In addition, the rule does not require the creditor to determine the heir’s ability to repay the mortgage before formally recognizing the heir as the borrower. As the named borrower, the heir may more easily be able to obtain account information, pay off the loan, or seek a loan modification. The rule can also apply to other family-related transfers, including transfers to living trusts, transfers during life from parents to children and transfers resulting from divorce or legal separation.

The CFPB also issued a memo stating that, to the extent permitted by federal law, the CFPB “recognizes all lawful marriages valid at the time of the marriage in the jurisdiction where the marriage was celebrated.” This rule means any terms used in laws, regulations and policies administered by the CFPB related to family and marital status shall now include lawful same-sex marriages and lawfully married same-sex This includes the Equal Credit Opportunity Act, Fair Debt Collection Practices Act, Truth in Lending Act and Real Estate Settlement Procedures Act.     Source: CUNA News Now

Cybersecurity Assessment Program Underway

The Federal Financial Institutions Examinations Council (FFIEC) has a new program to assess financial institutions’ cybersecurity supervisory policies and processes. Credit unions, ranging from small to very large assets sizes, will make up about half of the 500 institutions being examined during the launch of the program. The program, one of several FFIEC assessments planned, will strengthen and standardize their supervisory programs and be responsive to industry requests for supervisory guidance. Assessments under this pilot program will be performed using existing rules and regulations during the normal exam cycle. According to the NCUA, the pilot program will not result in any new examination rating; any policies and/or processes that do not meet legal requirements or supervisory expectation will be dealt with as during a standard exam.     Source: CUNA News Now

New Compliance Resource from NCUA

The NCUA has unveiled a new webpage aimed at helping credit unions comply with the new mortgage rules and other consumer lending rules required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and other laws. NCUA’s new Consumer Compliance Regulatory Resource webpage consolidates critical regulatory information in a single, easily accessible location.    Source:

Interest Rate Risk Resource Page Available

Interest rate risk poses a significant threat to the credit union system and the NCUA has launched a new web resource page for credit unions to use to better understand and prepare for changes in interest rates and the risk those changes present.

The new page includes videos, charts showing trends that affect interest rate risk, and links to NCUA regulations and letters to credit unions, interagency guidance, and best practice resources. s newest video about interest rate risk and the questions credit unions should answer is also posted on the resource page and NCUA’s YouTube channel.

NCUA Board Chairman Debbie Matz encouraged credit unions to take advantage of the agency’s new resource page as the credit union system moves into a new rate environment.    Source:

House vote: Where pot is legal, FIs can provide services

Marijuana-based businesses in states where it is legal should be able to access financial services, according to two votes by the House Wednesday.  The Financial Crimes Enforcement Network (“FinCEN”) is issuing guidance to clarify Bank Secrecy Act (“BSA”) expectations for financial institutions seeking to provide services to marijuana-related businesses. This FinCEN guidance clarifies how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations, and aligns the information provided by financial institutions in BSA reports with federal and state law enforcement priorities. This FinCEN guidance should enhance the availability of financial services for, and the financial transparency of, marijuana-related businesses. More

Monday, June 30, was the deadline for NCUA’s new CUSO rule

The new rule requires any federally-insured credit union with an outstanding loan to, or an investment in, a CUSO to enter into a written agreement requiring the CUSO to submit annual reports to the NCUA, as well as a state supervisory authority if the credit union is state-chartered. This article in Credit Union Magazine provides more information.

Mortgage Regulation to Be Front and Center in 2014

Will 2014 be the year the rubber meets the road when it comes to mortgage rules and regulation?
Jon Bundy, regulatory compliance manager for CUNA Mutual Group, thinks so. He told Credit Union Journal any discussion of lending during the next 12 months has to start with the wide-ranging impact of the many new rules that have been laid down in the wake of the Dodd-Frank Act.
“How credit unions lend is very much affected by regulations, especially mortgages,” he said. “A lot of credit unions will have to decide if they will do qualified mortgages, and if they will do mortgages that fall outside of QM.” Read the full article here.

Tailored approach better to address any home-based CU issues, CUNA says

WASHINGTON (1/27/14)–A proposal that would modify the operations of home-based federal credit unions is not justified on safety and soundness grounds, the Credit Union national Association said in a comment letter to the National Credit Union Administration. Equally troubling, CUNA said, is that this proposal reflects an increasing trend where the agency is developing regulations to address issues that should more appropriately, more effectively, and more efficiently be dealt with on an individual credit union-problem basis more  CUNA article