ARLINGTON, Va.—More in-depth reviews of credit unions' Bank Secrecy Act (BSA) and anti-money laundering policies and a look at the steps taken to prepare for the current expected credit loss (CECL) standard are expected during NCUA examinations this year, according to the agency's 2019 supervisory priorities.
In the Letter to Credit Unions 19-CU-01, NCUA Chairman J. Mark McWatters also said that examiners will have "increased flexibility to conduct suitable examination work offsite." In addition, the extended exam cycle will be fully implemented this year, and the agency will continue to use streamlined exam procedures for most credit union with assets less than $50 million.
Under BSA, compliance with the customer due diligence (CDD) rule and beneficial ownership requirements that went into effect in May 2018 will be part of the in-depth reviews, NAFCU noted.
For CECL, which credit unions do not need to begin reporting data on call reports until the beginning of 2022, examiners will also ask whether credit unions have performed analyses for how CECL would alter the allowance for loan and lease losses (ALLL) funding needs, NAFCU noted.
Other Areas of Focus
Other primary areas of supervisory focus in 2019 will include:
- Large concentrations of loan products and concentrations of specific risk characteristics
- Compliance with various consumer protection regulations, including the Home Mortgage Disclosure Act (HMDA), Military Lending Act (MLA) and Regulations B and E
- Cybersecurity through the use of its Automated Cybersecurity Examination Toolbox (ACET) for certain credit unions with assets over $250 million, as well as IT risk management and oversight of service provider arrangements
- Liquidity and interest rate risk management
The full letter can be found here.