WASHINGTON (1/15/09)—The Federal Financial Institutions Examination Council (FFIEC) issued guidance Wednesday for examiners, financial institutions, and technology service providers to identify risks, evaluate controls, and assess risk management practices related to remote deposit capture (RDC) systems. The FFEIC is comprised of the National Credit Union Administration and the federal bank and thrift regulators. Remote capture is a service that lets credit union members or bank and thrift customers to make deposits from their homes or businesses—removing the need for a trip to the financial institution. The service, used mostly by businesses, obviously saves time and travel expenses, but also can accelerate funds availability while reducing processing costs. However, the NCUA and other federal regulators warn that RDC systems introduce an added element of risk to processing deposits. In a recent Letter to CUs on risk management of remote capture, which was accompanied by the FFIEC guidance, the NCUA wrote that this service can add risk in legal, compliance, and operational areas. Performing effective risk management, the letter said, is the key to mitigate and control associated risks. It added that the risk management process should include:
*Risk Assessment: Management should perform a comprehensive risk assessment to identify and assess legal, compliance, and operational risks. * Risk Mitigation and Controls: Management should establish policies addressing risk tolerance levels, internal procedures and risk controls, risk transfer mechanisms, and contracts and agreements. * Risk Measuring and Monitoring: Management should establish operational performance metrics, benchmarks and standards, and develop management reports to support management oversight of RDC operations.
The letter also noted that too ensure sound implementation and ongoing operations, a credit unions’ board of directors should approve and oversee RDC plans and policies, and review performance and risk management reports. The NCUA suggested that questions should be directed to NCUA Regional Office or State Supervisory Authority.