Compliance Blog

Hello everyone! My name is Judy Dahn, and I started working for NAFCU at the beginning of this year. I work remotely from Michigan and I am excited to bring to you my first blog post!

Before we get started, I’d like to introduce you to my family which includes my dog, Stella (aka Ms. Independent), my daughter, Charlotte, who is queen of the house and my husband, Todd, who tolerates all the females in his life.

We enjoy getting outside as often as we can whether it is on the lake in the summer or snowboarding in the winter.

Now, let’s discuss more important things…this blog.

It is that time of year again, where we are planning what we want to achieve throughout the year. I don’t know about you, but when I begin to think about my own expectations throughout the year, I begin to think of home projects, vacations and what I want to accomplish. While I may have a list as long as my arm, federal regulators do not disappoint with their lengthy list of Fall 2022 regulatory agenda items.

Let’s begin by reviewing the NCUA’s agenda. We previously blogged about NCUA’s Fall 2021 agenda here. The Fall 2022 agenda includes many of the same items with updated timelines, though there are a few new items as well. Here is a breakdown of the current agenda:

• Climate-Related Financial Risk: The Fall agenda lists an upcoming advanced notice of proposed rulemaking in which NCUA will seek "public input on current and prospective climate-related financial risks to federally insured credit unions (FICUs), related entities, and the National Credit Union Share Insurance Fund (NCUSIF)." The agenda item also states that NCUA will seek input on "opportunities to strengthen its supervision and regulation of credit unions' management of and reporting on the physical and transition risks that may arise from climate change." The agenda originally listed the expected date for this item as December 2022, but - as of this blog's publication - it has yet to be published by NCUA. This NAFCU Compliance Blog post provides additional details on the topic of climate risk. 
• Subordinated Debt: In October 2022, the NCUA Board (Board) issued a proposed rule to amend its Subordinated Debt Rule which became effective on January 1, 2022. The proposal would extend the maximum maturity for subordinated debt and grandfathered secondary capital. NAFCU wrote a comment letter to the NCUA to express support for proposed changes to this rule.
• Procedures for Monitoring BSA Compliance: The NCUA as well as other federal regulators are planning to solicit comments via a proposed rule that would amend its Bank Secrecy Act Compliance Program rule consistent with the Anti-Money Laundering Act of 2020. The Fall 2022 agenda anticipates that the proposed rule could be published by March 2023.
• ACCESS Initiative: Chartering and Field of Membership (FOM) Regulations: As part of the Board’s Advancing Communities through Credit, Education, Stability, and Support (ACCESS) initiative, NCUA is considering the issuance of a proposed rule to amend its chartering and field of membership regulations. The proposed regulatory amendments would remove outdated requirements, simplify the charter approval process, and clarify regulatory language.
• Fintech: The agenda lists a proposed rule to “make more flexible a federal credit union's ability to take advantage of advanced technologies and opportunities offered by the fintech sector.” NCUA published this proposed rule in December 2022, which amends NCUA’s existing regulations regarding loan participations and eligible obligations. NAFCU members can view NAFCU’s regulatory alert on this proposal here, and can submit comments to NAFCU by February 22^nd for inclusion in an upcoming comment letter.
• Federal Credit Union Bylaws (Member Expulsion): In September 2022, the NCUA Board issued a proposed a rule which would amend the federal credit union bylaws and implement the Credit Union Governance Modernization Act (CUGMA) of 2022. This NAFCU Compliance Blog post provides additional details on the topic. Additionally, NAFCU submitted a comment letter to the NCUA to ensure that credit unions aren’t overburdened by the process and ask that a realistic expulsion policy be adopted. The Fall 2022 Rulemaking Agenda states that a final rule on this topic cay be expected by September 15, 2023 (which is the statutory deadline to implement the law).
• Simplification of Share Insurance Rules: The Board is considering proposing a rule to amend its regulations governing share insurance coverage by establishing a trust accounts category that governs coverage of shares of both revocable trusts and irrevocable trusts using a common calculation and provide consistent share insurance treatment for all mortgage servicing account balances held to satisfy principal and interest obligations to a lender. These amendments would be substantially similar to ones adopted by the Federal Deposit Insurance Corporation. The agenda estimates that a proposal could be published sometime in February 2023.
• Succession Planning: The Board previously issued a proposed rule that would require that FCU boards of directors establish and adhere to processes for succession planning. The succession plans will help to ensure that the credit union has plans to fill key positions, such as officers of the board, management officials, executive committee members, supervisory committee members, and (where provided for in the bylaws) the members of the credit committee to provide continuity of operations. The Board will review the comments and consider final action, which is expected in May 2023. This Compliance Blog post provides additional details on the topic.
• Cyber Incident Notification Requirements: In July 2022, the Board issued a proposed rule to require federally insured credit unions to notify the NCUA of certain cyber incidents.  NAFCU discussed this proposal in this post in the Compliance Blog. While the agenda states that a final rule could be expected in December 2022, no such rule was published. Instead, NCUA recently announced that a final rule on this topic will be considered at the NCUA’s February 2023 board meeting, which will be held on February 16, 2023.  
• Technical Amendments: The agenda announces that a final rule will make technical amendments to various provisions of the NCUA's regulations. These technical amendments correct minor technical problems and improve clarity. No substantive changes to the NCUA regulations are intended.

The NCUA’s agenda also includes several items carried over from previous rulemaking agendas.

Keep reading the Compliance Blog for updates on these new regulations as they’re published by the NCUA.

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