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
InfoSight – Bank Secrecy Act
The Bank Secrecy Act (BSA), also known as The Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act of 1970, was enacted to help in the investigations of money laundering, tax evasion and other criminal activity.

There are many laws and regulations that make up BSA. Among them are the Money Laundering Control Act of 1986; the Anti-Drug Abuse Act of 1986; the Currency and Foreign Transactions Reporting Act; and the Financial Recordkeeping and the Department of Treasury's Reporting of Currency and Foreign Transactions rules. The most recent law impacting BSA is Title III of the USA Patriot Act, passed in 2001.

On the Bank Secrecy Act Channel are 19 different topics, including Money Services Businesses and Virtual Currency. For more information, go to the Bank Secrecy Act channel .
Compliance Videos
Compliance Outlook for Q1 and Q2 2018 – NEW!!
In this NEW video, Glory LeDu provides the overview of what’s ahead in the compliance world for 2018 . This covers annual threshold updates, HMDA changes, Payday Alternative Loans, Military Lending Act, ACH Same-day ACH processing and more!
 
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
CFPB Issues Final Rule To Help Mortgage Servicers Communicate With Certain Borrowers Facing Bankruptcy
The Consumer Financial Protection Bureau (Bureau) has issued a final rule to help mortgage servicers communicate with certain borrowers facing bankruptcy. The final rule gives mortgage servicers more latitude in providing periodic statements to consumers entering or exiting bankruptcy, as required by the Bureau’s 2016 mortgage servicing rule.

The Truth in Lending Act requires mortgage servicers to provide periodic statements to borrowers, and the Bureau has developed sample forms for servicers to use. The 2016 mortgage servicing rule requires that servicers send modified periodic statements or coupon books to certain consumers in bankruptcy starting April 19, 2018. The rule also addressed the timing for servicers to transition to providing or ceasing to provide modified periodic statements to consumers entering or exiting bankruptcy. After issuing the rule, however, the Bureau learned that certain technical aspects of the timing of this transition may create unintended challenges and be subject to different legal interpretations. In October 2017, the Bureau sought public comment on a proposed rule that would provide greater certainty to help servicers comply. Subsequently, the CFPB finalized the proposed rule to provide a clear single-statement exemption for servicers to make the transition, superseding the single-billing-cycle exemption included in the 2016 rule.

The effective date for the rule is April 19, 2018, the same date that the other sections of the 2016 rule relating to bankruptcy-specific periodic statements and coupon books become effective.
 
Source: CFPB
Reporting HMDA Race/Ethnicity Data When the Borrower is a Business
The Home Mortgage Disclosure Act (HMDA) now requires business lenders to report data for business loans that are secured by a dwelling. Those lenders may be faced with the situation where the borrower is a business (e.g., a corporation or limited liability company). CUNA has received several questions about how and what to report the ethnicity and race fields.
 
In this situation, CUNA advises you report "NA" (for "Not Applicable") on both data points since the borrower is a business entity and therefore cannot have a race or ethnicity. This is also true even if you know the race and ethnicity of the owner of the business or the guarantor of the loan; you do not report the race and ethnicity on these persons. The business is the borrower, thus you report Not Applicable. More information can found in CUNA’s CompBlog post.
Federal Reserve Board Issues Proposed Rule to Amend Regulation J
T he Federal Reserve Board has issued a proposed rule to simplify Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire) and to make it conform more closely with Regulation CC (Availability of Funds and Collection of Checks).

The proposed amendments are intended to align the rights and obligations of parties, including the Federal Reserve Banks, with the Board's 2017 amendments to Regulation CC, which reflected the evolution of the nation's check collection system from one that is largely paper-based to one that is virtually all electronic. The proposed amendments would clarify and simplify provisions of Regulation J, remove obsolete provisions, and improve consistency between Regulation J and Regulation CC. The proposed amendments would also clarify that electronically-created items (check-like items created in electronic form that never existed in paper form) are not "items" that the Reserve Banks are authorized to handle under Regulation J.

The Board has also proposed amending Regulation J to clarify that financial messaging standards for Fedwire funds transfers, such as the international common format standard ISO 20022, do not confer or connote legal status or responsibilities with respect to Fedwire funds transfers.

Subpart A of Regulation J governs the collection of checks and other items by the Reserve Banks. This subpart includes the warranties and indemnities that are given to the Reserve Banks by parties that send items to the Reserve Banks for collection and return, as well as the warranties and indemnities for which the Reserve Banks are responsible in connection with the items they handle. Subpart A also describes the methods by which the Reserve Banks may recover for losses associated with their collection of items. Subpart A authorizes the Reserve Banks to issue operating circulars governing the details of the collection of checks and other items and provides that the operating circulars have binding effect on all parties interested in an item handled by a Reserve Bank. The Reserve Banks' Operating Circular No. 3, "Collection of Cash Items and Returned Checks" (OC 3), is the operating circular that is the most relevant to Reserve Banks' check collection activities. Subpart B of Regulation J provides rules to govern funds transfers through the Reserve Banks' Fedwire Funds Service. This service is also governed by the Reserve Banks' Operating Circular No. 6, "Funds Transfers through the Fedwire Funds Service" (OC 6).

Comment deadline is May 14, 2018.
Is Your Credit Union Ready for the Remote Deposit Capture Indemnity Provision of the Reg CC Final Rule?
The 2017 Regulation CC final rule becomes effective on July 1 this year.

The final rule creates a new Remote Deposit Capture Indemnity in Section 229.34(f) to address the allocation of liability when a depositary institution, such as a credit union accepts deposit of a check through "remote deposit capture." In other words, when the depositor/member sends the credit union electronic information about a check, such as a photographic image, which the credit union uses to create an electronic check or substitute check for collection. The proposed indemnity would be provided by a credit union that accepted a check via remote deposit capture to a financial institution that accepted the original check for deposit, in the event the financial institution that accepted the original check incurred a loss because the check had already been paid.

The final rule added an exception to the indemnity, and associated commentary, which would prevent a bank from making an indemnity claim if it accepted the original check containing a restrictive indorsement inconsistent with the means of deposit, such as "for mobile deposit only." The federal Reserve Board believed that providing this exception could reduce accidental double deposits and could provide incentives for financial institutions that receive remote deposit capture deposits to take steps to minimize intentionally fraudulent deposits.

Something to consider: If your credit union accepts checks via remote deposit capture, you may want add language to your Remote Deposit Capture Agreement (if the language isn't already there) that requires your member to add a restrictive indorsement to the check such as "For Mobile Deposit Only," or similar indorsement. Such an indorsement may help reduce risk to your credit union.
 
Source: CUNA Compliance Blog
Weekly Regulatory Advocacy Report
The Weekly Advocacy Report provides links to information about a number of recent League, CUNA and NCUA regulatory and advocacy activities. 
   
Upcoming Education Sessions
The League has several education sessions coming up. Several focus on compliance issues. They are listed in calendar format on the League website.
   
League Consulting Department Staff
(800) 285-5300
Compliance Calendar
March
  • March 16, 2018: Same-day ACH (NACHA) – Phase 3 of the implementation period for the rule.
April
  • April 1, 2018: Prepaid Accounts under the Electronic Fund Transfer Act/Regulation E and the Truth In Lending Act/Regulation Z (Date Extended)
  • April 29, 2018: 5300 Call Report Due to NCUA
May
  • May 11, 2018: Customer Due Diligence – CDD (FinCEN) – Effective date
  • May 28, 2018: Memorial Day - Federal Holiday
July
  • July 4, 2018: Independence Day - Federal Holiday
  • July 29, 2018: 5300 Call Report Due to NCUA
September
  • September 3, 2018: Labor Day - Federal Holiday
October
  • October 8, 2018: Columbus Day - Federal Holiday
November
  • November 12, 2018: Veterans Day (observed) - Federal Holiday
There's more available from InfoSight
InfoSight content is available from the League's website . Visit anytime to get sample policies, links to federal regulations and summaries of issues that are hot-topics at your credit union. 
 
Access to InfoSight is a benefit of League affiliation, so it is password-protected. If you don't have a password or if you have forgotten yours, click on the tan "Log In" button in upper right corner of the site; a box will open. Click on the blue wording to get your password.