Lscu directors newsletter q3 oct 15 2014 final

League of Southeastern Credit Unions & Affiliates

Director’s Resource League of Southeastern Credit Unions

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October 2014 | Vol. 5 Issue No. 3

President’s Message Credit unions received a major grassroots victory in September when the NCUA announced it will revise the risk-based capital (RBC) rule and offer a second comment period. The credit union industry generated 2,056 comment letters; which is a record for an issue. Seventy five percent of Congress signed a letter expressing concern for the new rule. Six of seven representatives from Alabama and 22 of 26 representatives from Florida signed the letter. In addition, Sens. Richard Shelby (R-AL) and Bill Nelson (D-FL) sent individual letters expressing their concern. This was a major boost from our two states.

The only official timetable on a revised rule has been “by the end of 2014.” Once the revised rule is released, the League will take a hard look at it and make sure the right pieces have been updated. NCUA Chairman Debbie Matz stated this summer risk weights would be looked at again, as well as five key areas: MBLs, mortgages, investments, CUSOs, and corporates. The rule needs further revisions. Once released, we will make sure you see and understand all of the changes and what they mean. We will all need to generate new comment letters. We’ve won an important battle, but the RBC war is not over.

FiN CEN for Credit Union Leadership - Culture of Compliance needed by Credit Union Leadership The Financial Crimes Enforcement Network (FinCEN) recently published a guidance advisory (FIN-2014-A007) warning credit unions, among other financial institutions, regardless of size or industry sector, that a poor culture of compliance can lead to shortcomings in Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) program effectiveness.

The FinCEN advisory states: “A financial institution’s leadership is responsible for performance in all areas of the institution including compliance with the BSA. As applicable, an institution’s leadership may include its board of directors, senior and executive management, owners and operators.”

Six steps are identified that will help strengthen a BSA program: 1. Leadership actively supports and understands compliance efforts

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Save the Date Turning Credit Union Financial Statements into Useful Ratios & Trends Oct. 21 Monday Webinar Click here for more information Southeast Leadership Development Conference Nov. 4-7 Tuesday - Friday Destin, FL Click here for more information CUNA GAC March 8-12 Sunday - Wednesday Washington, D.C. Click here for more information

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2. Efforts to manage and mitigate BSA/AML deficiencies and risks are not compromised by revenue interests 3. Relevant information from the various departments within the organization is shared with compliance staff to further BSA/AML efforts 4. The institution devotes adequate resources to its compliance function 5. The compliance program is effective by, among other things, ensuring that it is tested by an independent and competent party 6. Its leadership and staff understand the purpose of its BSA/AML efforts and how its reporting is used The reporting that financial institutions provide also assists in the fight against transnational criminal organizations including those involved in drug trafficking and massive fraud schemes targeting the U.S. government, businesses, and individuals. That same information may also help an institution protect itself and aid law enforcement in protecting the institution from bad actors, including insider threats, frauds, and cyber-related threats such as spear phishing, account takeovers, and distributed denial of service attacks, when such reports are filed.

Understanding and communicating the context and the purpose of FinCEN’s BSA/AML regime is as important to a financial institution’s culture as understanding its underlying requirements, and financial institutions should consider including such information as part of their ongoing training requirement. Read the complete FinCEN’s BSA/ AML guidance for more in-depth analysis of each of the six points in this story.

AL and FL credit unions meet with NCUA During September’s Hike the Hill, the League’s delegation, along with the Georgia and Idaho leagues, met with NCUA Vice Chairman Rick Metsger and new board member Mark McWatters. It was McWatters first credit union meeting. He told Alabama and Florida attendees that he favors a revised risk-based capital (RBC) rule. He said with all of the comment letters and the letters from Congress that it warranted another look. He also said that a second comment period should be given. Metsger said he was looking at all of the comment letters and because of the volume of letters that he did not know when a new proposed rule would be released.

A week later the NCUA announced that a revised RBC rule will be released later this year along with a second comment period. Also during the NCUA meeting, Metsger said that the agency is pushing the low income designation because it provides access to supplemental capital and it also eliminates the member business lending (MBL) cap. He also talked about data security and asked credit unions to watch for fraud, both internal as well from individuals looking to perpetrate financial scams against the credit union. Be more mindful when a member does not have their information and asks a teller to look it up.

This is the second year in a row that the Hike the Hill delegation has met with the NCUA on the trip to Washington, D.C.

September NCUA Report Now Available The September 2014 NCUA Report is now available online.

The latest issue includes a column from NCUA Board Chairman Debbie Matz on student loans, as well as articles from several NCUA offices on the agency’s initiatives and information on supervisory, regulatory, and compliance issues that are important to all federally insured credit unions.

Click here to read the September issue today!

City County CU of Ft. Lauderdale Director Mack MacVicar asks a question of the NCUA during the meeting at Hike the Hill.

Hike the Hill successful with lawmakers The Alabama and Florida delegation met with 34 lawmakers and staff in seven hours during September’s Hike the Hill. The visits with lawmakers were productive and the delegation left the meetings optimistic that some of the Alabama and Florida’s congressional delegation will co-sponsor H.R. 5061, a bill sponsored by Rep. Jeff Miller (R-FL) that would exempt business loans made to veterans from the MBL cap. The LSCU worked closely with Rep. Miller on the bill’s introduction. Many lawmakers said that they are interested in co-sponsoring. The hope is that the bill will gain traction, be introduced, and advance next year.

Lawmakers and their staff were very aware of the riskbased capital issue and want to stay informed of the progress. They also offered to help in any way they could.

This is a great sign that they not only understand credit union concerns, but that they agree with them. Data security was a hot topic in the wake of the recent Home Depot data breach. A national standard for data security, as well as holding merchants accountable for costs when they are at fault, was talked about. Several lawmakers said they were frustrated with the rash of breaches saying there needs to be a fix, but it has to be the right fix.

Credit unions have the opportunity to help with and be part of the solution.

League voter’s guides are now available The LSCU & Affiliates’ Voter’s Guide for Alabama and Voter’s Guide for Florida are now available. Each guide points out key leaders and shows lawmaker and candidate responses to five credit union questions. The Congressional Report Card for Alabama and the Congressional Report Card for Florida show how the federal delegation in each state have stood on credit union issues. Additionally, CUNA’s Guide to the 2014 Election as well as the Get Out the Vote posters found on the CUNA Elections Action Center can be duplicated and placed in your branches and offices for both your members and employees to see.

The voter’s guide and congressional scorecard can also be found on the LSCU Action Center webpage. The General Election is Nov. 4, 2014.

Nussle takes over reins at CUNA On Sept. 22, Jim Nussle officially began running CUNA. He comes to CUNA following 16 years as a congressman from Iowa. He most recently provided consulting services through his multi-disciplined public affairs media and strategic consulting firm.

In 2007, Pres. George W. Bush nominated Nussle to become the director of the Office of Management and Budget (OMB). During his time at the OMB, he was responsible for the president’s fiscal agenda, management agenda, regulatory priorities, general agency mission, administrative operations, and an $80 million operating budget.

Nussle has hit the ground running by releasing a video with his early priorities, an op-ed in The Hill publication, and immersing himself into what makes credit unions unique. The League is working to get him in front of Alabama and Florida credit unions as soon as possible. Interim CUNA CEO Bill Hampel returns to his former position as CUNA’s chief economist.

Southeast Leadership Development Conference Have you registered for this years’ Southeast Leadership Development Conference (SLDC), Nov. 4-7? If not, there is still time to register and with an educational track designed specifically for directors this is an event you won’t want to miss.

Register today and join the League for the Concurrent Director’s Institute Session including Enterprise Risk Management and Asset-Liability Management for Directors. The League’s Director of Regulatory Advocacy Scott Morris will explain the features that make up a robust Enterprise Risk Management Program and how assessing risk and monitoring performance are part of the same process. Then join Laura Vann, the VP of cooperative initiatives, as she discusses the importance of the board to keep abreast of change and improve its operations.

Plus, be sure to attend the breakout session BSA for Officials which will prepare attendees to identify, interpret, and understand the task facing credit unions as they attempt to ensure compliance with a changing BSA environment.

To receive the latest news from the LSCU, CUNA, and the NCUA, sign up for the League’s weekly newsletter, eSignal, at www.lscu.coop. To subscribe to the Director’s Resource Newsletter email: submissions@lscu.coop.