National Credit Union Administration (NCUA) 

NCUA Releases CECL Addendum to Its Audit Guide 

The NCUA released an addendum to the Other Supervisory Committee Audit, Minimum Procedures Guide which replaces procedures based on recent changes in accounting standards for CECL. 

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Internal Revenue Service (IRS) 

IRS to Offer an Employee Retention Credit Webinar on Feb. 8; Provides updates on Voluntary Disclosure Program, Moratorium 

The IRS, as part of an ongoing process to educate and inform people about the Employee Retention Credit (ERC), will host a free ERC Voluntary Disclosure Program webinar on Thursday, Feb. 8 at 2 p.m. EST. 

The 75-minute webinar will focus on: 

• Who can participate and how to apply for the ERC Voluntary Disclosure Program. 

• The advantages of the program and what happens after applying. 

• ERC resources available from the IRS. 

Though primarily aimed at tax professionals, who can earn one continuing education (CE) credit for participation, the webinar may also be useful to others interested in this topic, such as employers who are exploring options to resolve an inaccurate ERC claim that was processed and paid. The webinar also includes a live question-and-answer session. Those who want to attend need to register for the Employee Retention Credit Voluntary Disclosure Program webinar. 

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Financial Crimes Enforcement Network (FinCEN) 

FinCEN Issues Alert on Extremist Violence Against Palestinians in the West Bank 

FinCEN issued FinCEN Alert FIN-2024-Alert001 related to the financing of extremist violence against Palestinians in the West Bank. The alert provides select red flags to assist financial institutions in identifying and reporting suspicious activity that finances such violence. 

While the alert highlights the potential involvement of certain nonprofit organizations (NPOs) in facilitating payments to fund violence in the West Bank, FinCEN continues to emphasize that legitimate charities should have access to financial services and can transmit funds through legitimate and transparent channels. FinCEN also reminds financial institutions to apply a risk-based approach to Customer Due Diligence (CDD) requirements when developing the risk profiles of charities and other non-profit customers. No specific customer types, including charities and NPOs, automatically presents a higher risk of illicit activity. Additionally, as no single red flag is necessarily indicative of illicit or suspicious activity, U.S. financial institutions are encouraged to consider all the surrounding facts and circumstances before determining whether a specific transaction is suspicious or associated with potential Israeli violent extremist groups or campaigns. 

League InfoSight Highlight: The Writing Has Been on the Wall! 

Since January 2022, the CFPB has focused their attention on fees charged by financial institutions. Not only have they collected information from consumers on their experiences with fees, but they have also issued Advisory Opinions, Enforcement Actions, Compliance Bulletins, and Circulars to remind financial institutions of fee practices that could (or do) constitute an unfair act or practice under the Consumer Financial Protection Act. 

• June 2022 – Advisory Opinion – Debt Collectors’ Collection of Pay-to-Pay Fees 

• September 2022 – Regions Bank Enforcement Action – Surprise Overdraft Fees 

• October 2022 – Compliance Bulletin – Unfair Returned Deposited Item Fee Assessment Practices 

• October 2022 – Circular – Unanticipated Overdraft Fee Assessment Practices 

• February 2023 – Proposed Rule regarding credit card penalty policies 

• March 2023 – Supervisory Highlights – “Junk Fees” Special Edition 

• July 2023 – Bank of American Enforcement Action – Double-dipping on Insufficient Funds Fees 

When the CFPB recently issued two proposed rulemakings directly related to overdraft programs and non-sufficient funds fees, it shouldn’t have caught us by surprise. The writing has been on the wall! 

Overdraft Lending. This proposed rule is for financial institutions over $10 billion in assets to have certain overdraft programs covered under Regulation Z and applicable disclosure requirements and finance charge calculations (in general), which essentially allows consumers to shop as they do now for covered credit products. Overdraft programs that would be exempt from Regulation Z would only charge a fee for overdrafts that are calculated to be “break even,” either by their calculation or using the benchmark fees established under the rules (which is seeking feedback on $3, $6, $7, or $14). Credit unions under $10 billion shouldn’t get too comfortable, the CFPB is planning to monitor the market’s response to the rule, likely making another rulemaking for the smaller financial institutions. 

Nonsufficient Funds Fees. This proposed rule is for financial institutions as defined within Regulation E (so no asset size threshold here). The rule would prohibit a financial institution from assessing a nonsufficient funds fee in connection with any covered transactions. A covered transaction is when a consumer attempts to withdraw, debit, pay, or transfer funds from their account and the transaction is declined instantaneously due to insufficient funds. Examples would include one-time debit card transactions that are not pre-authorized, ATM transactions, and certain P2P transactions – generally those transactions that are authorized in real time. 

What can we learn from this example? Pay very close attention to the communications and guidance coming out of the CFPB as this most likely will foreshadow proposed rulemaking and focus from our regulatory agencies. Recently, we’ve seen a tremendous focus on the Fair Credit Reporting Act and Fair Lending/Regulation B. Take the time now to review the guidance and see if there are opportunities to adjust your policies, procedures, and processes. Being proactive and integrating changes (if needed) now, will save more time in the long run and have your credit union one step ahead with compliance. 

Make sure to leverage the resources from your League/Association! InfoSight, CU PolicyPro, and RecoveryPro are frequently reviewed and actively updated based on regulatory guidance and expectations.  

Glory LeDu
CEO, League InfoSight and CU Risk Intelligence 

Whether you are a federal or state-chartered credit union, there are state laws that impact your operations. The most efficient and quickest way to find those laws is through InfoSight. This member benefit provides you with access to applicable state content for all 50 states, without you needing to search through tons of random online sources. Stop wasting time trying to research when InfoSight has aggregated all the information your credit union needs to stay compliant in an ever-changing and evolving federal and state environment. 

The CFPB’s Enforcement Work in 2023 and What Lies Ahead 

Things to Remember When Filing 2023 Tax Returns 

Consumer Compliance Outlook Issue 4 Released 

Feb 8, 2024: NCUA Supervisory Priorities Webinar 

Feb. 12, 2024: Comments Due FRB Interchange Proposal 

Feb 19, 2024: Presidents Day - Federal Holiday 

Feb 20, 2024: Effective Date FinCEN BOI Access Rule 

Mar 11, 2024: Comments Due FTC Proposed COPPA Changes 

Mar 22, 2024: Last day to submit IRS ERC Voluntary Disclosure Program 

Mar 25, 2024: CFPB Proposed Rule on NSF (Declined Transaction) Fees 

Apr 1, 2024: Comments Due CFPB Overdraft Rule 

Apr. 30, 2024: 5300 Call Report Due 

May 12, 2024: FRB Interchange Fee Proposal Comments Due 

May 27, 2024: Memorial Day – Federal Holiday 

Our operations department is asking if under Reg CC they are allowed to place checkholds on members' checks if the member has a bankruptcy. I have already stated that this is not a reason to place an exception hold. I do not see how they could use bankruptcy as reason for "doubtful collectability". However, can you please confirm this for me? 

That is correct.  Reg CC is pretty specific that the exception hold for Reasonable cause to doubt collectability is about the check itself and not the person depositing the check: (1) In general. Sections 229.10(c) and 229.12 do not apply to a check deposited in an account at a depositary bank if the depositary bank has reasonable cause to believe that the check is uncollectible from the paying bank. Reasonable cause to believe a check is uncollectible requires the existence of facts that would cause a well-grounded belief in the mind of a reasonable person. Such belief shall not be based on the fact that the check is of a particular class or is deposited by a particular class of persons. 

The regulation provides that the determination that a check is uncollectible shall not be based on a class of checks or persons. For example, a depositary bank cannot invoke this exception simply because the check is drawn on a paying bank in a rural area and the depositary bank knows it will not have the opportunity to learn of nonpayment of that check before funds must be made available under the availability schedules. Similarly, a depositary bank cannot invoke the reasonable cause exception based on the race or national origin of the depositor. 

You might have a case of using the repeated overdrafts, but that would only apply if the member had been overdrawing their account, and not be based on them filing bankruptcy. 

12 CFR 229.13 Exceptions 

For your individualized login, select your state below. 

If you have questions about this communication, contact us at 800.546.4465, or via our shared email inbox at compliance@gowest.org.

Have a great week!

Your GoWest Compliance Team, 

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GoWest Credit Union Association, 18000 International Blvd, Ste. 1102, SeaTac, WA 98188, United States
1.800.995.9064

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