The competitive financial services industry continues to evolve, requiring credit unions and their partners, like GBQ, to be familiar with emerging trends and mandates. Credit unions and their advisors must be current on regulatory compliance matters, information technology and security of member information, accounting and financial reporting pronouncements and asset/liability management strategies. Our team continues to be on the leading edge of the industry, sharing topical and timely information on critical areas impacting credit unions. We’re pleased to share the top there regulatory compliance updates that should be top of mind:
1. Green Book – Chapter 5: Reclamations update impacting ACH processing staff
Effective March 1, 2023, the Bureau of the Fiscal Service (Fiscal Service) will no longer accept paper ACH reclamation responses.
- All responses, with the exception of ACH reclamations initiated by Defense Finance & Accounting Services (DFAS) and any Treasury-approved exceptions, must be submitted through the Automated Reclamation Processing System (ARPS), located on the PAY.gov website. This updated requirement is outlined within the Green Book – Chapter 5: Reclamations.
- If a response is returned to fiscal service by U.S. mail, fax or email, it will be rejected and the financial institution will be liable for any debits associated with that reclamation, due to an untimely response.
2. Home Mortgage Disclosure Act (HMDA) reporting threshold amendment impacting loan departments and compliance staff
On September 23, 2022, the United States District Court for the District of Columbia vacated the increased loan-volume reporting threshold for closed-end mortgage loans that was in the 2020 HMDA Rule. As a result of the September 23, 2022 order, the closed-end mortgage loan reporting threshold is 25 mortgage loans in each of the two preceding calendar years – the threshold established by the 2015 HMDA Rule.
You can access the technical amendment on the CFPB website here. The NCUA intends to take a flexible supervisory approach to allow for updates to policies, procedures, and operations. Please review the NCUA’s Regulatory Alert for further details.
3. AML software validation impacting senior management and compliance staff
A credit union’s ability to detect, evaluate, and report suspicious activity is foundational to the success of its BSA and Anti-Money Laundering program. Although not explicitly required by statute, an independent test and evaluation of AML software is increasingly being requested by Examiners to ensure the effectiveness of the product, and to verify it is appropriately configured for the credit union’s overall risk profile, operations, and membership. AML Software Validation audits offer additional benefits, including the avoidance of further scrutiny and costly remediation projects, as well as the potential to reduce false positives, thereby freeing up Compliance Staff resources.
Examiners frequently cite the FFIEC’s Bank Secrecy Act Anti-Money Laundering Examination Manual and the following provision within the Transaction Monitoring section located here:
“Management should periodically evaluate the appropriateness of filtering criteria and thresholds used in the monitoring process. Each credit union should evaluate and identify filtering criteria most appropriate for their institution. The programming of the credit union’s monitoring systems should be independently reviewed for reasonable filtering criteria….the monitoring system’s programming methodology and effectiveness should be independently validated to ensure that the models are detecting potentially suspicious activity. The independent validation should also verify the policies in place and that management is complying with those policies.”
When it comes to evolving accounting standards and keeping up with regulatory compliance matters, you can count on GBQ’s Credit Union Services team to navigate the challenges and empower growth of your organization. We are pleased to serve more than 75 credit union clients, with a majority of our opinion audit clients having assets between $40 million and $1.2 billion. Our team’s expertise combined with our firm’s resources is why GBQ is recognized by Callahan CPA as one of the leading credit union service firms in the country.