NCUA Outlines Supervisory Priorities for 2019

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The National Credit Union Administration (NCUA) has issued Letter to Credit Unions No. 19-CU-01, outlining its supervisory focus for 2019.

The extended exam cycle introduced in 2017 will be fully implemented in 2019.

Agency examiners will continue using the streamlined small credit union exam program procedures for most credit unions that have assets under $50 million. For all other credit unions, examiners will conduct risk-focused examinations, concentrating on the areas of highest risk, new products and services, and compliance with federal regulations.

In 2019, NCUA examiners will have increased flexibility to conduct suitable examination work offsite. In the agency’s Flexible Examination Program (FLEX) pilot, examiners were able to conduct as much as 35 percent of examination time offsite. The NCUA expects this increased flexibility will reduce the time impact on credit unions, save on travel costs and increase staff productivity.

Supervisory Priorities for 2019 include:

  • Bank Secrecy Act Compliance (including beneficial ownership compliance).
  • Concentrations of Credit (continued focus on large concentrations of loan products and concentrations of specific risk characteristics).
  • Consumer Compliance (HMDA; Military Lending Act; Regulation B’s adverse action requirements; and overdraft policies and procedures).
  • Current Expected Credit Losses (CECL) (While the CECL requirements may continue to evolve in 2019, examiners will inquire about efforts a credit union has taken to prepare for the new accounting standard, and whether a credit union has performed analysis for how CECL would alter the Allowance for Loan and Lease Losses funding needs.)
  • Information Systems and Assurance (Examiners will use the Automated Cybersecurity Examination Toolbox (ACET) to assess credit unions with over $250 million in assets; assessment of credit union IT risk management; and oversight of service provider arrangements).
  • Liquidity and Interest Rate Risks (The projected economic fluctuations in 2019 make this an increased area of emphasis.)

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