Compliance Blog

Written by JiJi Bahhur, Director of Regulatory Compliance

Thank You.  I wanted to extend a thank you to all attendees and presenters that joined us during last week’s sold-out Regulatory Compliance Seminar. As the compliance challenges continue, the ability to learn from each other and discuss common issues and concerns will continue to be an invaluable resource in the credit union industry and help everyone stay up-to-date on the latest requirements and interpretations.

Thanks again for making this year's Compliance Seminar a success.  When the group photo is available, I'll be sure to share.

NCUA’s October 2013 Board Action Bulletin.  Last Thursday, the National Credit Union Administration (NCUA) Board (Board) held its October 2013 Board meeting.  Three items were unanimously approved during the Board’s open session:

• A final rule requiring all federally insured credit unions to plan for liquidity events. Credit unions with assets exceeding $250 million need to have access to NCUA’s Central Liquidity Facility, the Federal Reserve’s Discount Window, or both.

• A final rule requiring all federally insured credit unions to electronically file Call Report information with NCUA. The rule will reduce operating costs and result in more accurate and timely credit union data.

• A proposed rule to protect the National Credit Union Share Insurance Fund by requiring annual stress tests at federally insured credit unions with assets exceeding $10 billion.

Other items on the open meeting agenda included:

• Board Briefing, Proposed Interagency Policy Statement, Joint Diversity Standards for Regulated Entities.

• Board Briefing, Proposed Interagency Rule, Part 760, Loans in Areas Having Special Flood Hazards.

• Quarterly National Credit Union Share Insurance Fund Report.

For a deeper look into the items discussed, ruled and briefed on during this meeting, take a look at NCUA’s Board Action Bulletin here, but I’d like to focus on the final Liquidity and Contingency Funding Rule.  The final rule – affecting section 741.12 of NCUA’s rules and regulations – requires all federally insured credit unions to take specific steps to ensure appropriate risk management and access to liquidity. 

In its Board Action Bulletin, the NCUA provides a helpful table summarizing the general requirements based on credit union size.

 

Credit Union Asset Size	Liquidity Rule Requirement
Under $50 million	Federally insured credit unions in this group must maintain a basic written liquidity policy. Approved by a credit union’s board, the policy must provide a framework for managing liquidity and a list of contingent liquidity sources that can be employed in emergency situations.
$50 million or more	In addition to a written liquidity policy, federally insured credit unions in this group must have a contingency funding plan that clearly sets out strategies for meeting emergency liquidity needs.
$250 million or more	In addition to a written liquidity policy and contingency funding plan, federally insured credit unions in this group must establish access to at least one contingent federal liquidity source: either NCUA’s Central Liquidity Facility, the Federal Reserve’s Discount Window, or both.

 

It should be noted that the final rule raises the highest asset threshold, which requires access to a federal liquidity provider, to $250 million from the $100 million in the proposed rule.

Effective March 31, 2014, the final rule is available online here. The NCUA published a Letter to Credit Unions (LCU) that provides guidance on how credit unions can comply with this regulation, including a timeline to ensure credit unions are in compliance by the effective date.  Also, NAFCU will issue a Final Regulation (NAFCU log-in required), which will be available here. 

Remittance Transfer Effective Date Alert.  Just a friendly reminder: today – October 28, 2013 – is the effective date for the final remittance transfer rule.