WASHINGTON—Congress held several hearings this week related to the National Flood Insurance Program (where reforms were proposed), and BSA/AML requirements.
A number of reforms for the National Flood Insurance Program (NFIP) were discussed during a House Financial Services Committee hearing this week on reauthorizing the program.
The hearing included bipartisan draft legislation from Committee Chairwoman Maxine Waters (D-CA), which aims to address the affordability of flood insurance and would also:
- Reauthorize the NFIP for five years
- Raise coverage limits
- Provide funds for improved mapping technology
- Mitigate fraud and abuse within the claims system
- Take steps to continue the financial solvency of the program to maintain market stability
Other proposed legislation related to the NFIP were also discussed, according to NAFCU.
Letter Sent
Ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler wrote in support of Waters' proposal, but cautioned against raising annual premium rates too quickly.
The committee heard from a panel of both Republican and Democrats. Republicans expressed concerns about forgiving the NFIP's debt without guaranteed reforms to make it financially solvent.
Lawmakers also discussed the importance of private flood insurance policies in helping increase affordability for consumers and reduce NFIP costs. Five federal agencies – including the NCUA – recently finalized an interagency rule that requires mortgage lenders to accept both private and government-backed flood insurance policies.
Hearing on BSA/AML
Separately, during a House Financial Services subcommittee hearing on legislative solutions to detect and deter financial crimes, lawmakers noted the compliance burden financial institutions face when trying to comply with Bank Secrecy Act (BSA)/anti-money laundering (AML) requirements.
Ahead of the hearing, Thaler wrote to the Subcommittee on National Security, International Development and Monetary Policy thanking House Financial Services Committee leadership for their efforts to strengthen and improve the BSA/AML system.
During the hearing lawmakers and witnesses discussed a number of credit union-related issues, including filing thresholds for currency transaction reports (CTRs) and suspicious activity reports (SARs), and beneficial ownership requirements. They also noted law enforcement's need for information contained in SARs and CTRs to track down bad actors.
Rep. Blaine Luetkemeyer (R-MO) stressed the importance of finding a "sweet spot" to raise SAR and CTR thresholds in order to reduce financial institutions' filing burdens and also make the reports more effective for law enforcement. One of the witnesses testified that only about 5% of SARs and CTRs provide value to law enforcement, NAFCU noted.
Three Proposals
The subcommittee's discussion centered on three proposals, one of which is offered by Committee Chairwoman Maxine Waters (D-CA) that would make changes to AML safeguards. Committee Member Carolyn Maloney (D-NY) offered another one to require corporations to disclose more information about their owners, NAFCU reported.
NAFCU also joined with eight other financial services industry trades this week to urge leaders of the House Financial Services and Senate Banking Committees address a number of issues related to the Financial Crimes Enforcement Network's (FinCEN) customer due diligence rule through a federal beneficial ownership registry of legal entities, and to modernize the BSA framework.