Nacha 

Nacha Issues Operations Bulletin #2-2024 

Nacha released ACH Operations Bulletin #2-2024 regarding the voluntary formatting standard for the individual name field. The bulletin does not require any party to use the voluntary standard, nor does it require any RDFI to perform name matching when receiving, processing, and posting ACH Entries. 

Nacha recommends the following standard for the content of the Individual Name field: 

LastName[space]AdditionalLastName[space]Suffix[space]FirstName[space]MiddleInitial[space&[space]SecondaryReceiverFirstName[space]SecondaryReceiverMiddleInitial 

If an Entry has two Receivers with different last names: 

LastName[space]AdditionalLastName[space]Suffix[space]FirstName[space]MiddleInitial[space&[space]SecondaryReceiverLastName[space]SecondaryReceiverFirstName 

Considerations for RDFIs with FinTech Relationships 

Nacha released a blog post which examines when an RDFI enters into a relationship with a fintech that provides consumers or businesses with an account that the customer can use to receive ACH transactions. The RDFI should consider the specific roles and responsibilities the fintech will perform and the implications for both onboarding the fintech and ongoing monitoring and oversight of the relationship. 

New Nacha Risk Management Portal Tool Will Help RDFIs Comply with New Rules on Fighting Fraud 

Fraud prevention should be top of mind for all financial institutions. New Nacha rules taking effect soon are intended to reduce the incidence of successful fraud attempts and improve the recovery of funds after frauds have occurred. And a new feature in Nacha’s Risk Management Portal will help banks and credit unions in that effort.   

Starting in August, a new module called Secure Exchange will be available in the portal. When authorized users log in to the portal and go to Secure Exchange, they’ll find two new forms: RDFI Notification of Status of Return Request and RDFI Notification of Exemption from Funds Availability Requirement. Each form enables an RDFI to comply with a specific obligation in the Nacha rules. 

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Oregon Office of Emergency Management (OEM) 

The Oregon Department of Emergency Management remains activated for wildfires burning in Oregon. This year there have been over 1,000 fires, burning over 1 million acres of land. There are currently four ‘megafires’, fires that exceed 100,000 acres, all in eastern Oregon. In support of those farmers and ranchers impacted by the fires, the Oregon State University Extension Service offers resources and links, which can be found here: Post Fire Resources. This website also includes information on how to provide support, including a link to the Oregon Cattlemen's Association Wildfire Fund which will assist Oregon ranchers affected by the fire. 

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Financial Crimes Enforcement Network (FinCEN) 

FinCEN Issued Notice to Customers of Financial Institutions on Beneficial Ownership Information Requirements 

FinCEN published a Notice to Customers of financial institutions: Beneficial Ownership Information Reference Guide. The guide provides answers to key questions about: 

• Reporting beneficial ownership information to FinCEN under the Corporate Transparency Act; and 

• Providing beneficial ownership information to financial institutions in connection with federal customer due diligence requirements. FinCEN encourages financial institutions to share this reference guide with customers that may be required to report beneficial ownership information. 

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Federal Reserve System (Fed) 

Consumer Compliance Outlook – Second Issue 2024 

The Fed released the second issue for 2024 of the Consumer Compliance Outlook.  

This issue focus on consumer complaints and shared insights into: 

• The benefits of a formal complaint management program; 

• A review of complaints received by the Federal Reserve in 2023; and 

• Enhancing the compliance management program with complaint management. 

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Internal Revenue Service (IRS) 

IRS Shares Five More Warning Signs of Incorrect Claims for the Employee Retention Credit 

The IRS continues to intensify work on the Employee Retention Credit (ERC) and recently shared five new warning signs being seen on incorrect claims by businesses. 

The new warning signs include: 

• Essential businesses during the pandemic that could fully operate and didn’t have a decline in gross receipts. 

• Businesses unable to support how a government order fully or partially suspended business operations. 

• Business reporting family members’ wages as qualified wages.   

• Business using wages already used for Paycheck Protection Program loan forgiveness. 

• Large employers claiming wages for employees who provided services. 

League InfoSight Highlight: Succession Planning - Newest Proposed Rule

At their last board meeting on July 18, the NCUA approved another proposed rule on succession planning. You will remember that they issued a proposed rule back in February of 2022 to require federal credit unions to establish a process for succession planning for key positions.

This new proposed rule is based on the 2022 proposal but includes several changes that will impact both federal credit unions (FCUs) and federally insured state-chartered credit unions (FISCUs). Why? The NCUA found that poor succession planning was either a primary or secondary reason for almost 32% of consolidations.

The newly proposed rule would require the credit union to have a written succession plan that addresses specified positions within the credit union including the following positions or their equivalent (at a minimum):

• Board of Directors

• Supervisory Committee

• Credit Committee (only if involved in the daily review of loans)

• Loan Officers (in lieu of credit committee involved in the daily review of loans)

• Management officials and assistant management officials

• CEO, assistant CEO or VP level, CFO or any other critical role established by the board

Addressed in the plan would be titles and incumbents for each covered position. Expiration of the incumbent’s term or other anticipated vacancy date (retirement eligibility or announced departure date). There will also need to be a plan or strategy for temporarily and permanently filling vacancies, including due to unexpected circumstances. For example, smaller credit unions may consider partnering with a larger credit union to fill unexpected positions as part of their plan.

The plan would also need to include strategies for recruiting candidates with the potential to assume each of the identified positions. Associate board members, mentorship programs, educational opportunities, staff development plans, and other similar efforts could be included.

Budget impacts should also be considered, such as compensation to attract talented candidates, and/or market comparable for similar positions.

Proposed rules would also require education requirements for FCU directors to have a working familiarity with the succession plan no later than six months after the appointment. The written succession plan would also be required to be reviewed and updated no less than annually. Meeting minutes would be documented showing the approval and rationale for any substantive deviation from the plan.

Keep your eye out for changes to CU PolicyPro, specifically Policy 1520: Succession Planning and the corresponding model Succession Plan (1520.10) as this rule becomes finalized. Credit unions can also find information on strategic planning within InfoSight on the Board Responsibilities channel.

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. 

CFPB Sues Rent-a-Center Affiliate Acima and Acima’s Founder for Illegal Lending Practices 

CFPB to Distribute Over $8 Million to Consumers Harmed by All American Check Cashing, Inc. 

How to Avoid Scams Related to the Latest Immigration Announcement 

Avoid Rental Listings Scams 

Refund Checks Going to Zurixx Customers  

Aug. 8, 2024: OFAC Interim Final Rule Requiring Use of Electronic Reporting System 

Aug. 12, 2024: Comments Due CFPB Proposed Rule Concerning Medical Debt and Credit Reports

Aug. 14-15, 2024: Fraud Symposium

Sept. 3, 2024: Comments Due – FinCEN AML/CFT Program Amendments 

Sept. 9, 2024: Comments Due – CFPB Proposed Mortgage Servicing Amendments 

Sept. 23, 2024: NCUA Proposed Rule on Succession Planning 

Sept. 24, 2024: NCUA Proposed Changes to Agency Information Collection Activities 

May a Washington, Oregon, or Idaho state-chartered credit union invest in real property or leasehold interests for its own use? 

Yes, a Washington State chartered credit union may invest in real property or leasehold interests for its own use subject to the following limitations: 

1. The credit union's net worth equals at least five percent of the total of its share and deposit accounts; 

2. The board approves the investment; and 

3. The aggregate of all such investments does not exceed 7.5% of the total of its share and deposit accounts. Additionally, if the investment is acquired for future expansion, the credit union must satisfy the three requirements above within three years after the credit union makes the investment. 

In Oregon, investments in real property are more restricted. Under ORS 723.152(4), credit unions may acquire, lease, hold and dispose of property, either in whole or in part, necessary or incidental to the credit union’s operations. Oregon administration rules limit this ability in sections 441-710-0240 through 441-710-0270: investment is limited in the aggregate to 5% of total assets; more requires prior approval of the director. 

And for investment property for future expansion: 

1. When real property is acquired for future expansion, at least partial utilization should be accomplished within a reasonable period, which shall not exceed three years unless otherwise approved in writing by the director. 

2. When a credit union acquires unimproved real property for future expansion, the credit union shall at least partially utilize the property within a reasonable period of time, not to exceed six years unless otherwise approved in writing by the director. 

3. After real property acquired for future expansion under sections (1) or (2) of this rule has been held for one year, a board resolution with definitive plans for utilization must be available for inspection by the director's examiners. 

4. Investments in premises will be recorded on the credit union's books in accordance with generally accepted accounting principles. The cost of land shall be carried on the books of the credit union in an account separate from the cost of improvements thereon. 

In Idaho, credit unions can own, hold or use real property provided they follow the limitations laid out in IDS 26-2109. The current limit is 7.5% of total assets. 

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 weekend!

Your GoWest Compliance Team, 

Copyright © 2023 GoWest Credit Union Association. All Rights Reserved.

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

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