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1.3M in NCUA grants available to LICUs

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WASHINGTON (4/2/12)—Low-income credit unions can now apply for a total of $1.3 million in grants to help support their financial literacy, staff and board member training, internship, and tax prep assistance efforts, the National Credit Union Administration (NCUA) said on Friday.

The NCUA in its letter to credit unions 12-CU-04 said the grant money was appropriated by Congress through the Community Development Revolving Loan Fund (CDRLF). Eligible credit unions may apply for as much as $25,000 in funding. Grant applications are due to the agency by June 29.

The NCUA is also providing grants of up to $7,500 through its Urgent Needs Initiative. Credit unions that have been impacted by a natural disaster or other unexpected event may apply for these funds.

The agency also noted that the grant program has been streamlined, with the addition of a fully automated, online funding application.

Eligible credit unions may file a single application for all funding initiatives, and reimbursement requests for multiple grant initiatives can be bundled together, the NCUA added. These changes will allow the NCUA to process grant requests more quickly, and will also speed the disbursement of grant related funds, the agency said.

NCUA Chairman Debbie Matz encouraged eligible credit unions to apply for the grants, and said those that had questions regarding their eligibility could consult the criteria listed in Part 701.34 of the NCUA Rules and Regulations.

The Wisconsin Department of Financial Institutions and Wisconsin Department of Public Instruction last week also announced they have made $250,000 available to the state's K-12 public and private schools to promote financial literacy. (See related News Now story: Wisconsin regulators announce $250K fin lit grants)

For the full NCUA release, use the resource link.

NCUA should focus on exam improvements reg relief CUNA

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WASHINGTON (4/2/12)--Examination improvements and a continued focus on regulatory relief are two areas that the Credit Union National Association urged the National Credit Union Administration (NCUA) to focus on in the coming months, with particular emphasis on implementing exam improvement procedures now, rather than waiting for legislation to be enacted.

In a Friday letter to the agency, CUNA President/CEO Bill Cheney urged the NCUA to consider how certain provisions of the Financial Institutions Examination Fairness and Reform Act (H.R. 3461) could be implemented outside of the legislative process.

The bill, which is co-sponsored by House Financial Services subcommittee on financial institutions chair Rep. Shelly Moore Capito (R-W.Va.) and ranking member Rep. Carolyn Maloney (D-N.Y.), would allow credit unions and other institutions to discuss examination concerns with a newly created Federal Financial Institution Examination Council (FFIEC) ombudsman, and to appeal regulator decisions before an independent administrative law judge.

The bill would also give credit unions and other financial institutions access to decision-making information gathered in their exams and codify exam policy guidance for financial regulators.

Cheney noted that CUNA had recommended that financial regulatory examiners provide credit unions with background information that supports their regulatory directives. "This recommendation is consistent with NCUA's Examiners' Guide and good public policy," Cheney said. CUNA also suggested that NCUA Chairman Debbie Matz, who is the current leader of the FFIEC, work with that group to establish the FFIEC ombudsman position, and urged the NCUA to provide additional and ongoing information and clarifications to the credit union system on how credit unions can appeal examiner findings, directives and other examination concerns.

Turning to the NCUA's own regulatory agenda, the CUNA CEO said the agency should seriously consider whether any new rules are actually necessary, including ones that are in the pipeline. "Healthy credit unions deserve to be encouraged; they deserve to have support from policymakers and they deserve a break from the constant regulatory pounding they have experienced virtually since the beginning of the economic downturn," Cheney said.

He noted that that CUNA is now conducting a line-by-line review of NCUA's rules to provide additional recommendations on how the rules could be minimized and streamlined. CUNA would also like to explore field of membership issues with the agency, including recommendations to facilitate greater service to rural districts and other communities, in the near future. CUNA has recently discussed these and other issues with NCUA staff.

Cheney also said that the agency's efforts, directed by Matz, to begin a review of the examination process and exam concerns as well as to limit regulations, were important steps in the right direction. CUNA discussed these endeavors with the agency at last month's CUNA 2012 Governmental Affairs Conference, and Cheney in last week's letter said CUNA wants to work with the NCUA on these important matters, including the examination review, which could be one of the agency's most important projects.

CUNA's Examination and Supervision Subcommittee has already met with NCUA Director of Examinations and Insurance Larry Fazio and hopes to follow up with him again in the coming weeks. The Subcommittee is also working on best practices for credit unions in the examination process.  

For the full CUNA letter to the NCUA, use the resource link.

FinCEN addresses BSA e-filing warns of tax fraud

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WASHINGTON (4/2/12)—The Financial Crimes Enforcement Network (FinCEN) last week advised financial institutions on how to identify instances of tax refund fraud, and also provided additional guidance on how to use its e-filing system to file new versions of Suspicious Activity Reports (SAR) and Currency Transaction Reports (CTR).

FinCEN in a release noted that financial institutions "are critical in identifying tax refund fraud because the methods for tax refund distribution--direct deposit into demand deposit accounts, issuance of paper checks, and direct deposit into prepaid access card accounts--are often negotiated and deposited at various financial services providers."

The agency said signs of potential tax refund fraud include:

  • Multiple direct deposit tax refund payments that are made to a single accountholder;
  • Suspicious or authorized account opening at a depository institution, on behalf of individuals that are not present, with the fraudulent actor being named as having signatory authority;
  • Business accountholders that process third-party tax refund checks in a manner inconsistent with their stated business model or at a volume inconsistent with expected activity;
  • Accountholders that process a large number of tax refund checks for individuals that live out-of-state;
  • Processing of multiple refund checks that are for similar dollar amounts;
  • Processing of Treasury refund checks or bank checks that are sequentially numbered or are within a few numbers of each other; and
  • Discrepancies between the dollar amount of refund checks being deposited and the amount of currency being withdrawn to cover the cashing of these refund checks.
The elderly, minors, prisoners, the disabled, or the recently deceased are often victims of this type of fraud, FinCEN said. The agency encouraged institutions that believe this type of fraud is occurring to use the term "tax refund fraud" in the narrative section of their SAR and provide a detailed description of the activity.

FinCEN began accepting new versions of SARs and CTRs through its e-filing system last Friday, and the agency provided guidance for institutions that are using the new versions of these forms.

The new SARs and CTRs can be customized for the various institutions that file them, by greying out sections of the report that do not apply to a given financial institution. The new e-filing versions of SARs and CTRs also include extra data elements on various types of suspicious activities and financial fraud schemes. The agency has also marked certain sections that are "critical" to the reports being filed properly, and has limited the narrative section of the report to 17,000 characters.

FinCEN said it may need to develop additional guidance for the new SAR and CTR forms.

The E-Filing System will continue to accept submissions of the older SAR and CTR forms until March 31, 2013. FinCEN will require financial institutions to e-file all SAR and CTR reports beginning on July 1. A limited number of institutions may be granted a "temporary hardship exemption."

For FinCEN releases on tax fraud and SAR/CTR e-filing guidance, use the resource links.

Inside Washington (03/30/2012)

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  • SPRINGFIELD, Mass. (4/2/12)--Norman Halls, chairman of STCU CU, Springfield, Mass.; and Michael Ostrowski, STCU CU president/CEO, travelled to Washington, D.C. for the Credit Union National Association's (CUNA) Government Affairs Conference (GAC) in March. Halls and Ostrowski met with their congressional representatives and exchanged greetings with National Credit Union Administration chair Debbie Matz. Member business lending, access to alternative capital and increased regulation were among the topics Hall and Ostrowski discussed with legislators. "Member business lending was an especially important issue for us," Ostrowski said. "We agree with the experts who say business growth is the only way out of the current economic situation.  We support efforts to increase the amount of money credit unions are allowed to lend to businesses. We don't want to turn away businesses because of the cap." From left, Matz meets Ostrowski and Halls during CUNA's GAC, where Matz was a general session speaker. (Photo provided by STCU CU) …
  • WASHINGTON (4/2/12)-- The Senate Banking Committee held its first hearing Thursday on mobile payments, discussing ways the technology is disrupting existing regulatory processes (American Banker March 30). The House held a hearing on the same issue last week. If mobile payments are made through a financial institution, the existing banking and consumer protection laws apply, but payments made through a text message via a mobile network provider don't fall under banking laws, said Banking Committee Chairman Tim Johnson (D-S.D.).  Industry participants said they would like regulators to work collaboratively to define the regulatory environment for mobile payments, said Kenneth Montgomery, chief operating officer of the Federal Reserve Bank of Boston, which is leading an industry working group on mobile payments …

Economic improvement stars in latest NCUA update video

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ALEXANDRIA, VA. (4/2/12)--The ongoing economic recovery and the National Credit Union Administration's (NCUA) recently adopted interest rate risk (IRR) rule are addressed in the NCUA's latest YouTube briefing by its Office of the Chief Economist.

In the video, NCUA Chief Economist John Worth notes that while the economy does seem to be bouncing back post-recession, increasing oil prices do pose a risk to this recovery.

Worth in the video is also joined by Office of Capital Markets Director J. Owen Cole, who addresses the NCUA's final IRR rule.

The agency earlier this year announced it would release an ongoing series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.