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National Credit Union Administration (NCUA)
NCUA’s 2024 Supervisory Priorities
The NCUA released Letter to Credit Unions 24-CU-01 which outlines the NCUA’s supervisory priorities and updates the agency’s 2024 examination program. The NCUA’s primary areas of supervisory focus in 2024 will be:
Credit Risk - Economic conditions continue to change the credit risk environment in the credit union industry, as inflation, high interest rates and borrowing costs, declining savings levels, and the end of pandemic-era stimulus and relief programs have negatively impacted some members’ ability to repay their debts. NCUA examiners will review existing lending programs’ soundness and credit union risk management practices, including any adjustments a credit union made to loan underwriting standards, portfolio monitoring practices, modification and workout strategies for borrowers facing financial hardships, and collection programs.
Liquidity Risk - Credit unions will need to maintain strong liquidity risk management in 2024, due to increased uncertainty in interest rate levels and economic conditions. Pressure in deposit pricing and the use of wholesale funding is accelerating as alternative funding options, while new lending, participations, and loan sale markets may slow. In evaluating the “L” component of CAMELS to determine the adequacy of a credit union’s liquidity risk management framework, examiners will continue to consider the current and prospective sources of liquidity compared to funding needs. Examiners will review the credit union’s policies, procedures, and risk limits, and also evaluate the adequacy of the credit union’s liquidity risk management framework relative to its size, complexity, and risk profile.
Consumer Financial Protection - The NCUA will continue assessing federal credit unions’ compliance with applicable consumer financial protection laws and regulations. To determine areas of supervisory focus, the NCUA considers trends in violations identified through examinations and member complaints, emerging issues, and any recent changes to regulatory requirements. In 2024, examiners will accordingly focus on areas related to:
Information Security (Cybersecurity) - The evolving cybersecurity threat landscape poses persistent risks to credit unions. As credit union technology-related operating environments become ever more complex, it is crucial to establish a cybersecurity program that can adapt and evolve to counter these threats effectively.
Recognizing the importance of cybersecurity, the NCUA continues to prioritize this area as a key examination focus. Examiners will continue to assess whether credit unions have implemented robust information security programs to safeguard both members and the credit unions themselves. Examiners will continue to utilize the information security examination procedures in 2024, ensuring a thorough evaluation of cybersecurity measures.
Registration Open for Supervisory Priorities Webinar
The National Credit Union Administration is hosting a webinar on February 8 to share key points about the NCUA’s 2024 supervisory priorities.
The NCUA’s 2024 Supervisory Priorities Webinar will provide exclusive insights into the agency’s key supervisory focus areas this year, expounding on the 2024 Supervisory Priorities Letter to the Credit Unions. This year’s letter includes credit risk, liquidity risk, interest rate risk, consumer financial protection, and information security as priorities. The webinar will also cover updates on the Bank Secrecy Act and support for small credit unions and minority depository institutions.
Registration for the webinar, “2024 Supervisory Priorities,” is now open. The webinar is scheduled to begin at 2 p.m. Eastern and run approximately 60 minutes. The webinar will be close captioned, and there is no charge. Participants will be able to log in and view the event on their computers or mobile devices using the registration link.
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Consumer Financial Protection Bureau (CFPB)
CFPB Proposes Rule On Fees for Instantaneously Declined Transactions
The CFPB issued a proposed rule which would find charging NSF fees (declined transaction fees) on covered transactions as prohibited transactions. Covered transactions are defined as: an attempt by a consumer to withdraw, debit, pay, or transfer funds from their account that is declined instantaneously or near-instantaneously by a covered financial institution due to insufficient funds.
Comments on the proposed rule are due by March 25, 2024.
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Federal Reserve Board (FRB)
FRB Annouces it Will Extend Comment Period on the Interchange Fee Proposal
The FRB announced it will extend the comment period on its interchange fee proposal until May 12, 2024. Additionally, the FRB published additional data related to the interchange fee cap. The Board published the data to give the public additional information as they consider the proposal. The additional data is available here.
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Internal Revenue Service (IRS)
IRS Continues Work on ERC; New IRS Criminal Investigation Education Sessions Come as Agency Urges Businesses to Review VDP
The IRS renewed calls for businesses to review their eligibility for the Employee Retention Credit as the agency’s law enforcement arm, Criminal Investigation (CI), begins a series of educational sessions for tax professionals. If businesses do not meet the criteria, but claimed the credit, they should consider applying for the Voluntary Disclosure Program before the March 22 deadline. The IRS has also created a special withdrawal program for those with pending claims about which they have eligibility concerns. Both programs can help affected employers avoid penalties and interest on incorrect claims.
ERC Voluntary Disclosure Program open until March 22, 2024:
Businesses that filed a claim in error and received a payment may be able to participate in the IRS Voluntary Disclosure Program. The special program runs through March 22, 2024, and the IRS has added provisions allowing repayment of just 80% of the claim received. This reflects the share that ERC promoters took of a business’ ERC payment – frequently around 20%.
ERC eligibility information for businesses with questions:
For more information on ERC eligibility, the IRS has prepared special information to help businesses understand the complex guidelines about the credit, sometimes referred to as the Employee Retention Tax Credit or ERTC. The special information includes ERC frequently asked questions and the ERC Eligibility Checklist, which is available as an interactive tool or as a printable guide. The interactive tool provides an easy, interactive way for businesses to check their eligibility.
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Financial Crimes Enforcement Network (FinCEN)
FinCEN Proposed Rule on Special Measure Regarding Al-Hud Bank, as a Foreign Financial Institution of Primary Money Laundering Concern
FinCEN issued a proposed rule which would prohibit the opening or maintaining of correspondent account in the United States for, or on behalf of, Al-Huda Bank, a foreign financial institution based in Iraq found to be of primary money laundering concern.
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