InfoSight, Vol. 13, Issue 10

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One of the benefits of your credit union's League membership is access to InfoSight--a valuable online compliance resource. This newsletter contains some timely highlights, and access to InfoSight is a benefit of League affiliation, so it is password-protected. If you have a specific compliance issue or concern, contact our Consulting Department at (800) 285-5300. Replies to this email will be directed to SVP, League Services & Regulatory Analysis Joe Guilfoy .

InfoSight Highlight

What can InfoSight do for your credit union?

Provides insight to and understanding of key compliance issues
Helps increase compliance by offering checklists and action steps, so you can readily determine if and how a regulation applies to you — and what you need to do about it
Saves your staff valuable time by providing easy-to-understand compliance content in a standardized format
Offers access to compliance information for other states and CUNA

Compliance Videos

Compliance Connection Video

In this video , League InfoSight CEO Glory LeDu talks about the highlights from the 4 ^th Quarter of 2018 and the 1 ^st Quarter of 2019.

When S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, passed in 2018 there was a lot to understand! Glory LeDu, League InfoSight CEO, provides Part 1 in this short video to break it down for you.

Just a reminder that Compliance videos since 2016 can be found on YouTube at the Compliance Connection channel , where they are generally updated quarterly.

Compliance News

House Members Introduce Bill to Allow Cannabis Banking

A bipartisan group of House members on Thursday introduced legislation that would provide credit unions and other financial institutions with a safe harbor from sanctions for doing business with marijuana-related businesses.

Democrats Ed Perlmutter of Colorado and Denny Heck of Washington introduced H.R. 1595, which has 99 Democratic cosponsors and nine Republican cosponsors. “Only Congress can provide the certainty financial institutions need to start banking legitimate marijuana businesses – just like any other legal business – and reduce risks for employees, businesses and communities across the country,” Heck said. “If Congress fails to act, we are discouraging responsible, regulated markets and allowing a serious public safety threat to go unaddressed,” Heck said.

Under current law, because cannabis is considered illegal under the federal Controlled Substances Act, financial institutions providing services to licensed marijuana businesses are subject to criminal prosecution.

As a result, some cannabis-related services, many of which are cash businesses, cannot be provided with traditional banking services.

Perlmutter and Heck have introduced similar legislation in the past. However, this year’s bill includes protections for ancillary businesses, such as real estate owners, adjusts tribal language and changes the definition of cannabis business.

In a recent interview , Perlmutter and Heck said they are pleased with the support their effort has received.

The two are members of the House Financial Services Committee, which recently held a hearing on the issue. H.R. 1595 has been referred to that committee, as well as the House Judiciary Committee.

At that hearing, Rachel Pross, chief risk officer with the Maps Credit Union in Salem, Ore. said that her institution has been providing banking services to cannabis-related businesses since marijuana is legal in that state.

However, she said that her credit union risks federal sanctions for conducting that business and that that risk should be removed.

CUNA, NAFCU, as well as the American Bankers Association have endorsed the legislation. And during a recent Senate Banking Committee hearing, Federal Reserve Chairman Jerome Powell said that Congress should consider providing financial institutions with clarity on the issue.

Source: CU Times

FSOC proposes changes to nonbank designations guidance

The Financial Stability Oversight Council (FSOC) yesterday voted unanimously to issue for public comment proposed interpretive guidance on nonbank financial company designations. The proposed guidance would implement an activities-based approach to identifying and addressing potential risks to financial stability. It would also enhance the analytical rigor and transparency of the Council’s process for designating nonbank financial companies. Under the guidance, the Council would:

Prioritize its efforts to identify, assess, and address potential risks to U.S. financial stability through an activities-based approach. The Council would monitor diverse financial markets and market developments in consultation with relevant financial regulatory agencies. In the event a potential risk to U.S. financial stability is identified, the Council would leverage the expertise of existing regulators in pursuing the implementation of actions to address the risk.
Perform a cost-benefit analysis before designating any nonbank financial company. The Council would consider the benefits and costs of a designation for the U.S. financial system and the relevant company. The Council would designate a nonbank financial company only if the expected benefits justify the expected costs of the designation.
Assess the likelihood of a nonbank financial company’s material financial distress when evaluating the firm for a potential designation. Before designating a nonbank financial company, the Council would consider not only the impact of an identifiable risk, but also the likelihood that the risk will be realized. Doing so will ensure that the Council remains focused on those risks that are most likely to pose a threat to U.S. financial stability.
Create a more efficient and effective nonbank financial company designation process. The proposed guidance would create a more efficient and effective designation process by condensing the current three-stage process into two stages, increasing engagement and transparency to firms and their regulators, and creating off-ramps that allow firms to understand and address potential risks to financial stability

Source: US Department of Treasury

New law protects minors against ID theft

The CFPB has posted an article regarding a new federal law (section 301 of EGRRCPA) that went into effect September 21, 2018, which lets parents and child welfare representatives of people under 16, as well as legal guardians, request a security freeze, also called a credit freeze, on their behalf.

Source: CFPB

Get-rich-quick victims to get $644,000

The Federal Trade Commission has reported that it will be mailing 12,072 refund checks totaling more than $644,000 to people who lost money to a get-rich-quick scheme that falsely claimed they could earn significant money working online by using products marketed as “secret codes” by the operators of the Mobile Money Code scheme.

Source: FTC