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Articles by Nick St. John
In Focus: Fair Lending Risk
Back in January, the National Credit Union Administration (NCUA) published their 2024 supervisory priorities, which outline the agency’s main focal points during examinations. While the priorities included several topics, this blog will focus on just one – fair lending (which was technically a sub-topic under the “consumer financial protection” heading).
CFT is the New BSA: Recent Developments
Greetings, Compliance friends! Here in Virginia, it’s that time of year already – the kids have returned to school. Most students have a favorite subject – math, history, etc. When it comes to compliance, my favorite subject is the Bank Secrecy Act (BSA). Those who have been reading my blog posts for awhile likely know that I am a self-confessed Bank Secrecy Act (BSA) nerd. It’s been a few months since my last blog focusing on BSA, and a lot has happened in the interim.
Watt’s the Deal with the Volt-Ampere?
The volt-ampere is a commonly used but usually misconstrued measurement in electrical systems design. It is important to understand its proper usage when creating component specifications within a circuit. Whenever we measure electrical power, we think about watts. The watt, named after the Scottish inventor James Watt, defines the power a system consumes. Specifically, electrical power is defined as the product of the system's instantaneous voltage input level and current consumption.
Precision Robotics Drives Manufacturing Method To Pure Positivity
As researchers strive to improve battery performance metrics such as charging rate and capacity, they focus on battery technology and chemistries beyond the commonly used lithium-ion and nickel-cadmium materials. Some promising materials have improved performance, but current manufacturing methods introduce many impurities into these chemistries, negating their positive effects.
CFPB Limits Credit Card Late Fees
If you’re an avid watcher of the Consumer Financial Protection Bureau (CFPB or bureau) like I am, then you’ve no doubt been paying close attention to the bureau’s war on fees. As we’ve blogged about previously, the CFPB has been targeting nearly every type of fee – from overdraft and non-sufficient funds fees, to paper statement fees and returned item fees.
Additional Fair Lending requirements for CDFIs; Car Sales Rule
Last week, my wife and I celebrated 10 years of marriage by spending a few days in the Caribbean. Relaxing in paradise and enjoying the sunshine and turquoise water was an excellent mental break at the end of a long and extremely busy year.
Financial innovation: Recent changes to loan participations
At its September 2023 meeting, the NCUA board unanimously approved a final rule that would amend NCUA’s existing regulations to make it easier for credit unions to work with third-parties in the lending space, such as financial technology (FinTech) companies. The rule took effect on October 30, 2023. NAFCU’s Regulatory Affairs team has published a members-only final regulation summary of this final rule.
Financial Innovation: Recent Changes to Loan Participations
Nov 15, 2023 Financial Innovation: Recent Changes to Loan Participations At its September 2023 meeting, the NCUA board unanimously approved a final rule that would amend NCUA’s existing regulations to make it easier for credit unions to work with third-parties in the lending space, such as financial technology (FinTech) companies. The rule took effect on October 30, 2023. NAFCU’s Regulatory Affairs team has published a members-only final regulation summary of this final rule.
CFPB continues to focus on fees
If you’ve been following credit union compliance issues during the past 2 years, then you’ve no doubt heard about the effort by the Consumer Financial Protection Bureau (CFPB or bureau) to combat what they’ve dubbed to be “junk fees.” NAFCU disagrees with the “junk fee” label, especially when applied to fees charged by member-owned not-for-profit credit unions.
CFPB Continues to Focus on Fees
Oct 25, 2023 CFPB Continues to Focus on Fees If you’ve been following credit union compliance issues during the past 2 years, then you’ve no doubt heard about the effort by the Consumer Financial Protection Bureau (CFPB or bureau) to combat what they’ve dubbed to be “junk fees.” NAFCU disagrees with the “junk fee” label, especially when applied to fees charged by member-owned not-for-profit credit unions.
Artificial Intelligence and Adverse Actions
Sep 27, 2023 Artificial Intelligence and Adverse Actions A few months ago, we blogged about the various guidance the federal financial regulators had published regarding artificial intelligence (AI). Last week there was a development regarding that topic – the Consumer Financial Protection Bureau (CFPB, or bureau) published a new Consumer Financial Protection Circular (circular) which discussed Adverse Action Notice (AAN) requirements and how they apply when AI is used.
Peering into the Future: 2023 Supervisory Highlights (Pt. 1)
Aug 09, 2023 Categories: CFPB Examination & Enforcement Peering into the Future: 2023 Supervisory Highlights (Pt. 1) Sometimes, I think I can predict the future. For example, I know that tomorrow morning my seven-year-old son will wake up at some ridiculously-early time of day.
Breaking up is about to be easier to do
Last week, the National Credit Union Administration (NCUA) held its July board meeting, which featured a unanimous vote by the board to approve a final rule which will implement the Credit Union Governance Modernization Act (CUGMA). This rule will amend the Federal Credit Union (FCU) Model Bylaws (which are found in Appendix A to Part 701 of the NCUA regulations) to add new provisions relating to member expulsion and limitation of services.
Compliance Risk: Multiple NSF Fees
Jul 19, 2023 Compliance Risk: Multiple NSF Fees Hello, compliance folks! Summer 2023 is in high gear. While that means potential fun in the sun, it also means there are many risks out there. The risk of getting a sunburn. The risk of touching poison ivy. The risk of buying counterfeit tickets to a Taylor Swift concert. I could go on.
Indirect Lending: Compliance Risk Considerations
From time to time, the NAFCU Compliance Team receives questions from our members regarding indirect lending arrangements. Such partnerships with third-parties present plenty of opportunity to credit unions, by helping to connect credit unions with potential borrowers (and thus potential members). However, there are also some compliance risk considerations that come into play as well. Let’s go back to basics and review indirect lending, particularly in the context of the non-member applicant.
Regulators vs. robots: AI under scrutiny
Remember The Jetsons? That cartoon imagined an optimistic future in which humans zipped off to work in flying cars and had sassy housecleaning robots like Rosey to make their lives more convenient. The show originally aired in the early 1960s, which means it’s now about 60 years old (wow!).
Regulators vs. Robots: AI Under Scrutiny
Remember The Jetsons? That cartoon imagined an optimistic future in which humans zipped off to work in flying cars and had sassy housecleaning robots like Rosey to make their lives more convenient. The show originally aired in the early 1960s, which means it’s now about 60 years old (wow!).
The ride-share conundrum: An exception to an exception
Greetings, compliance folks! I recently had the pleasure of enjoying a road trip from Northern Virginia down to sunny Orlando, Florida – my wife, our two kids and I piled into our car and drove over 800 miles to visit some relatives and then spend several days at Disney World. While waking up early every day and spending all day pushing a double-stroller around an amusement park was not necessarily “relaxing,” it was a fun trip and we made a lot of great memories.
The Ride-Share Conundrum: An Exception to an Exception
May 17, 2023 The Ride-Share Conundrum: An Exception to an Exception Greetings, compliance folks! I recently had the pleasure of enjoying a road trip from Northern Virginia down to sunny Orlando, Florida – my wife, our two kids and I piled into our car and drove over 800 miles to visit some relatives and then spend several days at Disney World.
CFPB sends notice about HMDA address errors
In recent weeks the NAFCU Compliance Team has heard from a handful of credit unions about a notice they’ve received from the Consumer Financial Protection Bureau (CFPB or Bureau) relating to the data they reported under the Home Mortgage Disclosure Act (HMDA). The notice announces that the CFPB’s “HMDA Operations team” reviewed the credit union’s HMDA Loan/Application Register (LAR) for 2020, 2021 and 2022 and concluded that the data “may contain invalid entries” in the “Street Address” field.
CFPB Sends Notice About HMDA Address Errors
May 01, 2023 CFPB Sends Notice About HMDA Address Errors In recent weeks the NAFCU Compliance Team has heard from a handful of credit unions about a notice they’ve received from the Consumer Financial Protection Bureau (CFPB or Bureau) relating to the data they reported under the Home Mortgage Disclosure Act (HMDA).
Taking care of business: Recent developments in commercial lending
Does your credit union offer small business loans? Perhaps you began serving businesses after the NCUA changed its commercial lending and member business loan rules several years ago, or perhaps the Paycheck Protection Program spurred your credit union to get into the small business lending game. Maybe you’re well versed in SBA loan programs and know that assisting small businesses in your community can further your credit union’s mission of helping your community to thrive.
Taking Care of Business: Recent Developments in Commercial Lending
Does your credit union offer small business loans? Perhaps you began serving businesses after the NCUA changed its commercial lending and member business loan rules several years ago, or perhaps the Paycheck Protection Program spurred your credit union to get into the small business lending game. Maybe you’re well versed in SBA loan programs and know that assisting small businesses in your community can further your credit union’s mission of helping your community to thrive.
Back to basics: Share insurance
The failure of Silicon Valley Bank (SVB) and Signature Bank just over a week ago proved to be one of the biggest stories for the financial services industry in the past several years. Deposit insurance played a large role in the story, as initial reporting indicated that a number of SVB’s customers could lose millions due to having large amounts of uninsured funds at the bank. Ultimately the federal government stepped-in and guaranteed that SVB’s customers would get all their funds back.
Back to Basics: Share Insurance
The failure of Silicon Valley Bank (SVB) and Signature Bank just over a week ago proved to be one of the biggest stories for the financial services industry in the past several years. Deposit insurance played a large role in the story, as initial reporting indicated that a number of SVB’s customers could lose millions due to having large amounts of uninsured funds at the bank. Ultimately the federal government stepped-in and guaranteed that SVB’s customers would get all their funds back.
The check is in the mail – unless it’s been stolen - CUInsight
Last Spring, my wife and I finally made the switch from renting to actually owning our first home. We moved ourselves, our two young children, and our cat into our new home and promptly discovered that we had a sewer line problem. Welcome to homeownership! Our house had been built in the 1960s, and the sewer line that runs under our front lawn was an old cast iron pipe that had worn down and broken over the decades and needed to be replaced.
The Check is in the Mail – Unless It’s Been Stolen | NAFCU
Mar 01, 2023 Categories: BSA The Check is in the Mail – Unless It’s Been Stolen Last Spring, my wife and I finally made the switch from renting to actually owning our first home. We moved ourselves, our two young children, and our cat into our new home and promptly discovered that we had a sewer line problem.
FinCEN flexes new power in Bitzlato order
Are you a fan of superhero movies? Do you enjoy watching the big-budget (and lets be honest, mostly CGI) triumph of good over evil? I do. My wife and I watched Iron Man on our second date and since then have tried to keep up with all of the Marvel Cinematic Universe, although that’s gotten much harder over the years considering it now spans about 30 movies and multiple TV shows.
FinCEN Flexes New Power in Bitzlato Order
Feb 01, 2023 Categories: BSA FinCEN Flexes New Power in Bitzlato Order Are you a fan of superhero movies? Do you enjoy watching the big-budget (and lets be honest, mostly CGI) triumph of good over evil? I do. My wife and I watched Iron Man on our second date and since then have tried to keep up with all of the Marvel Cinematic Universe, although that’s gotten much harder over the years considering it now spans about 30 movies and multiple TV shows.
California Laws Affecting Credit Unions in 2023
Greetings, Compliance folks! It’s January, which means many of us will be making New Year’s resolutions. One of my resolutions this year is to get out and travel more – I’ve lived my entire life on the East Coast of the United States and have never traveled to most of the Western states. Sadly, this means I’ve never been to the great state of California.
Coming in 2023: Hybrid annual meetings
Greetings, Compliance folks! The joy of the holiday season is upon us – decorations adorn most buildings, holiday music is playing in stores, and kids (including my own) are eagerly awaiting their presents. This time of year also means that federal credit unions (FCUs) are also trying to plan for the upcoming calendar year, including planning their annual meetings. NCUA recently released a new letter to federal credit unions on the topic of planning annual meetings.
CFPB warns of possible direct dispute violations
Credit reports – a wealth of information about a person’s financial habits that can serve as the determining factor in credit decisions or even employment decisions or background checks. Given the outsized impact a credit report can have on a person’s life, it’s important that the information contained in the credit report be accurate, and that credit unions handle disputed information appropriately.
FinCEN adopts the first of three CTA rules
Greetings, Compliance folks! Fall is in full swing – I recently took a trip to upstate New York for a family function and was delighted to see the gorgeous fall foliage in the mountains. We also took a family trip to an apple orchard and did some apple picking, which my son and daughter both enjoyed immensely.
Breaking down NCUA’s CUGMA proposal
Earlier this year, we blogged about the Credit Union Governance Modernization Act (CUGMA), which was signed into law in March. As our previous blog discussed, CUGMA amended the Federal Credit Union Act to make it easier for federal credit unions (FCUs) to expel problematic members, such as those that engage in violent, abusive or illegal behavior.
NCUA responds to rising rates by revising interest rate risk framework
Greetings, compliance folks! As a compliance professional, and I’m naturally a risk-averse person. Apparently, the apple does fall far from the tree, as my six-year-old son seems to be a daredevil. He loves running at full speed, climbing, and jumping off of things.
Data security: It’s also a UDAAP issue
The Consumer Financial Protection Bureau (CFPB or bureau) recently published a “consumer financial protection circular” that concluded having insufficient data protection or information security could be an unfair act or practice, thereby implicating the federal prohibition against unfair, deceptive or abusive acts or practices (UDAAP). To review, credit unions are already subject to a number of requirements relating data protection.
Another large bank fined millions for sham accounts
The Consumer Financial Protection Bureau (CFPB) recently announced a consent order with U.S. Bank, a Minnesota based bank with $559 billion in assets. According to the CFPB, U.S. Bank “issued credit cards and lines of credit and opened deposit accounts for certain consumers without their knowledge and consent and without required applications and disclosures…” Does this sound familiar?
Risky business: Every customer is different
When it comes to money laundering (ML) and terrorist financing (TF) risk, potential members are not created equally. In fact, there are certain professions or businesses that have been identified by federal regulators as possibly requiring more in-depth Bank Secrecy Act (BSA) compliance processes, such as marijuana related businesses (MRBs), private ATM owners, politically exposed persons, nonprofit entities, and more.
OFAC continues crypto crack down; FinCEN seeks comments on No Action Letters
June 2022 is now in full swing, which means the temperatures are heating up outside, people are having barbeques, and kids are beginning their summer vacations (including my six-year-old, who just finished kindergarten). It’s been a while since we’ve provided a roundup of BSA activity, so let’s look back at some recent actions by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).
FinCEN asks credit unions to help fight kleptocracy
We’ve blogged a lot recently about compliance issues raised by Russia’s invasion of Ukraine and the U.S. sanctions imposed by the Biden Administration to put pressure on the Russian government. In addition to the sanctions administered and enforced by the Office of Foreign Assets Control (OFAC), Russia also presents financial crime concerns as oligarchs attempt to evade sanctions and use the U.S. financial system to engage in money laundering and other financial crimes.
CUGMA offers promise, but awaits NCUA action
On March 15, 2022, President Biden signed a large omnibus spending package into law. Included within that Omnibus bill was a legislative change that Federal Credit Unions (FCUs) have requested for a long time – the Credit Union Governance Modernization Act (CUGMA). In summary, CUGMA amends the Federal Credit Union Act (FCU Act) to add a new avenue through which FCUs can expel problematic members. I enjoy a good FAQ, so let’s break down CUGMA FAQ-style: Why was CUGMA needed?
HMDA thresholds continued: The partial exemption
Recently we blogged about the Home Mortgage Disclosure Act (HDMA) and the reporting thresholds found in Regulation C. Today, we’ll focus on another set of thresholds in Regulation C – those which determine whether a credit union qualifies for the “partial exemption.” First, let’s quickly review what was covered in that previous blog: Regulation C sets out activity thresholds which determine if a credit union is required to collect, record, and report certain data under HMDA.
Untangling the HMDA thresholds
For credit union compliance professionals, February means that the annual Home Mortgage Disclosure Act (HMDA) reporting deadline is approaching. As we creep closer to the reporting deadline, the NAFCU compliance team often receives questions regarding the applicability of Regulation C (which implements HMDA), so let’s take some time to refresh our knowledge on this topic.
NCUA plans for succession plan requirements
A few weeks ago, the National Credit Union Administration (NCUA) Board held its January 2022 monthly meeting. During the meeting, the Board approved a proposed rule that, if adopted as a final rule, would require Federal Credit Unions (FCUs) to create succession plans for filling certain positions to ensure continuity of operations. Let’s review this rule and how it would affect the credit union industry: Which credit unions would be subject to the rule?
New Year’s resolutions Part 3: NCUA
Over the past few weeks we’ve blogged about the “New Year’s Resolutions” – i.e. the rulemaking agendas – of both FinCEN and the CFPB. Today we’ll round out this topic by discussing the National Credit Union Administration’s (NCUA) Fall 2021 Rulemaking Agenda, which was published last month. For a full picture of the NCUA’s plans for 2022, it would also be useful to consider the NCUA’s Supervisory Priorities for 2022, which we blogged about last week.
New Year’s resolutions Part 2: The CFPB
Last week, we blogged about FinCEN’s “New Year’s Resolutions,” as laid out in the Fall 2021 Rulemaking Agendas they published in December. Today we’ll take a look at the agenda of another federal regulator – the Consumer Financial Protection Bureau (CFPB). The CFPB’s Fall 2021 regulatory agenda was relatively short.
New Year’s resolutions Part 1: FinCEN
Welcome to the first Compliance Blog post of 2022! At this time of year, many people adopt New Year’s resolutions – setting goals or accomplishments to work towards during the rest of this calendar year. While federal regulators don’t have New Year’s resolutions per se, they did recently publish their regulatory agendas, which include many actions expected in the coming year. Let’s review FinCEN’s Fall 2021 agenda.
'Tis the season for BSA updates
Season greetings, compliance folks! December is already shaping up to be a busy month in terms of Bank Secrecy Act (BSA) updates from the regulatory agencies. Let’s review some recent changes to the BSA landscape: FFIEC Manual Updates On December 1, 2021, the Federal Financial Institutions Examination Council (FFIEC) announced changes to their BSA/AML examination manual. The update includes a new section, as well as updates to three existing sections.
BSA Basics: The role of the board and the supervisory committee
The NAFCU compliance team sometimes receives questions regarding the role of a credit union’s officers in Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance. Let’s review some of the responsibilities of the Board of Directors and Supervisory Committee in terms of a credit union’s BSA functions: The Written Program. Section 748.2(b) of the NCUA regulations requires a credit union to have a written BSA compliance program.
Cautionary tales: A roundup of DOJ cases
Department of Justice I hope everyone had a great Labor Day weekend! Speaking of laboring, the U.S. Department of Justice (DOJ) has been working hard on a number of criminal cases over the past few months. Today’s blog will examine a few cases that may have some significance for credit union compliance: Man Pleads Guilty to Lying to Bank about MRB: Providing financial services to marijuana-related business (MRBs) can be complicated from a compliance perspective.
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