1. Judy Graham, Program Officer
Office of Examination and Insurance
New Examination Procedures, Common Concerns & 2017 Outlook from a Regulators Perspective
January 2017

2. Overview Supervisory Priorities for 2017 Bank Secrecy Act Regulations
Compliance Concerns
Supervisory Focus
Customer Due Diligence Regulation

3. Supervisory Priorities 2017
Letter to Credit Unions – January 2017
Streamlined small credit union exam procedures
Assets > $50 million
CAMEL rates of 1, 2, or 3
Extended Examination Cycle
Letter to Credit Unions 16-CU-12

4. Supervisory Priorities 2017
Cybersecurity Assessment
Cybersecurity Assessment Tool
Bank Secrecy Act Compliance
Internal Controls and Fraud Prevention
Interest Rate and Liquidity Risk
LCU 16-CU-08

5. Supervisory Priorities 2017
Commercial Lending
LCU 16-CU-11
Consumer Compliance
Military Lending Act – LCU 16-CU-07
Servicemembers’ Civil Relief Act

6. NCUA BSA Regulations
12 USC 1786(q)(2) requires NCUA to conduct a review of the BSA compliance program at each examination of a federally insured credit union.  
12 CFR requires every federally insured credit union to establish a BSA compliance program that:
Establishes a system of Internal Controls to ensure ongoing BSA compliance
Provides for Independent Testing for BSA compliance by the credit union or outside party
Designates a BSA Compliance Officer responsible for monitoring day-to-day compliance
Establishes a BSA Training program for appropriate employees and volunteers
Establishes a Customer Identification Program

7. Compliance Concerns Information Sharing (FinCEN 314(a) lists)
Check the lists timely
Document activity
Activity Report available in SISS
Update point of contact info
Credit Union Online at
Up to four points of contact may be provided
Up to three week time lag for changes to take effect

8. Compliance Concerns Internal Controls
Review and update risk assessment
Maintain adequate Suspicious Activity Monitoring System
Perform proper Member Due Diligence procedures

9. Compliance Concerns Independent Testing
Include all credit union operations
Risk based
Should be recent (12 to 18 months)
Should be independent

10. Compliance Concerns Training Risk-based
Recent (12 to 18 months – depending on risk)
Document training
Cover BSA requirements and credit union’s policies & procedures
Include training for Board of Directors/Supervisory Committee

11. Supervisory Focus – Money Services Businesses (MSBs)
MSBs offer one or more of the following services:
Issuers or sellers of money orders or traveler’s checks
Check cashers
Dealers in foreign exchange
Must conduct more than $1,000 in money services business activity with the same person (in one type of activity) on the same day
-OR-
Provides money transfer services in any amount
Provider or Seller of Prepaid Access – various limits apply

12. Due Diligence Expectations - MSBs
Not all MSBs pose the same level of risk, and not all MSBs will require the same level of due diligence
NCUA Letter to Credit Unions 14-CU-10
Interagency Guidance Issued April, 2005
Minimum Due Diligence Expectations
Perform CIP
Confirm FinCEN registration, if applicable
Confirm state or local licensing, if applicable
Conduct BSA/AML risk assessment
Conduct Enhanced Due Diligence, if applicable

13. Risk Assessment Purpose of the account Anticipated account activity
Types of products and services offered
Locations and markets served

14. Due Diligence Expectations
Enhanced Due Diligence*
Review the MSB’s BSA/AML Program
Review results of the MSB’s independent testing
Review written procedures for the operation of the MSB
Conduct on-site visits
Review list of agents, including locations
Review written employee screening practices
* This list is not all inclusive, nor are all of the steps listed on this slide required. Each credit union must make the determination of the enhanced due diligence steps it will take depending upon the level of perceived risk posed by each account.

15. Customer Due Diligence (CDD)
FinCEN finalized CDD Rule May 11, 2016 – effective May 11, 2018
Credit unions already expected to conduct adequate CDD as part of internal controls
Rule clarifies existing CDD expectations
Rule also requires CUs to obtain Beneficial Ownership information related to legal entities
Ownership
Control
Certification Form Available
NCUA working with other regulators regarding examination expectations

16. Resources NCUA website: www.ncua.gov
NCUA Examiner’s Guide
AIRES BSA Questionnaire
NCUA Compliance Self-Assessment Guide
Interagency Statement on Enforcement of BSA\AML Requirements
FFIEC BSA/AML Examination Manual:
FinCEN Website:

17. Office Contact Page
Feel free to contact our office with questions or comments.
Primary Staff: Judy Graham
Program Officer
Office Phone:
Secondary Staff: