Removing Barriers Blog

NCUA Outlines Supervisory Priorities for 2019
Posted January 09, 2019 by CUNA Advocacy

In a letter addressed to Chief Executive Officers and Boards of Directors for credit unions, the National Credit Union Administration has outlined it supervisory priority areas for 2019. In particular, the Administration has identified the following areas for examination focus:

Bank Secrecy Act Compliance

Examiners will continue to perform in-depth reviews of credit unions’ Bank Secrecy Act and anti-money laundering policies, procedures, and processes to assess compliance with an emphasis on assessing credit unions’ efforts to comply with the recently implemented New Customer Due Diligence regulations for Financial Institutions (31 CFR 1010.230).

Concentrations of Credit

Examiners will also focus on issues involving large concentrations of loan products and concentrations of specific risk characteristics. Where excessive levels of credit concentration risk are identified, examiners will work with credit union management to identify strategies to mitigate the risk.

Consumer Compliance

NCUA examiners will continue to perform limited reviews to ensure federal credit unions’ good faith efforts to comply with the 2018 HMDA data collection and reporting requirements, while accounting for the statutory partial exemptions that took effect on May 24, 2018.  In addition to HMDA, NCUA examiners will also focus on credit unions’ Military Lending Act (MLA) compliance, compliance with Regulation B’s notification requirements following adverse action on credit applications, and compliance with Regulation E’s requirements pertaining to overdraft policies and procedures.

Current Expected Credit Losses (CECL)

While acknowledging that the CECL requirements may continue changing in 2019, NCUA indicates that examiners will still inquire about a credit union’s efforts to prepare for the new accounting standard, and whether a credit union has performed analysis for how CECL would alter the Allowance for Loan and Lease Losses funding needs.

Information Systems and Assurance

Examiners will continue conducting information security maturity assessments using the Automated Cybersecurity Examination Toolbox (ACET to examine the security, confidentiality, and integrity of member information.

IT Risk Management & Service Provider Management

Two additional areas identified by NCUA for supervisory focus in 2019 are the assessment of credit union IT risk management and oversight of service provider arrangements to ensure that credit unions implement effective risk-based supply chain management.

Liquidity and Interest Rate Risks

Finally, examiners will continue to assess credit unions’ liquidity and interest rate risk management.

For more information on the NCUA 2019 Supervisory Priorities, please click here.