Compliance: Focus on These Five This Year



What areas of focus will be critical for your credit union in the upcoming year? Credit Union BUSINESS’s compliance expert breaks down the Big 5 spheres your CU will have to tackle for 2016. Keep reading to find out what they are.

No doubt this year will present another regulatory compliance juggernaut. Focus and prioritization are a credit union’s best allies when it comes to keeping the heads of staff above water. What follows are five critical areas of focus every credit union must tackle this year.

Bank Secrecy Act (BSA)

This area has long been a top priority for state and federal examiners, and their attention to detail on all things BSA is only expected to intensify as the U.S. continues to fight criminal and terrorist activity. Therefore, buttoning up your BSA compliance strategy this year is a sound use of compliance resources. In fact, CUNA recently referred to BSA compliance training as an issue with “no room for error.”

A few areas to which examiners are applying additional scrutiny:

  • Regulators may have a questionnaire that will help them with their examinations.
  • Examiners will want to see that the credit union is following the FFIEC BSA Examination Manual requirements.
  • Credit unions with money services business (MSB) relationships face additional risks, so examiners will want to see that staff has the appropriate training to handle these accounts and that systems are in place to monitor them.


The amount of intrusions on companies from outside hackers has raised awareness of just how vulnerable members’personally identifiable information truly is. Regulators, including the NCUA, are paying close attention to the increased number of cybersecurity incidents and are making protection of financial institution IT infrastructure, systems and processes a top priority.

Two things you can do to align the prioritization your credit union places on cybersecurity with that of examiners:

  • Get familiar with the FFIEC’s cybersecurity assessment tool and use it on at least an annual basis. The NCUA has said it plans to include the assessment in exams.
  • Establish or update policies and procedures for responding to unauthorized access to member information.

TILA-RESPA Integrated Disclosure Rule (TRID)

TRID became effective in October of 2015, so every credit union that provides real estate loans must follow the new requirements for estimate and closing disclosures. While NCUA and CFPB examiners may be taking it somewhat easy on credit unions at the outset of the year, that’s likely to change as we continue through 2016.

Are your documents up to date? Check to be sure:

  • The loan estimate contains Truth in Lending disclosures as well as the Good Faith Estimate.
  • The closing disclosure contains Truth in Lending disclosures as well as the HUD-1 Settlement Statement.

Unfair, Deceptive or Abusive Acts or Practices (UDAAP)

This particular regulation has been a major focus of the CFPB, which has been on the lookout for financial services organizations it perceives to be less than forthright with consumers. The agency has penalized offenders with multi-million-dollar fines as a result of negative exam findings.

Because UDAAP covers many different areas of a credit union, it can seem like an overwhelming prospect to ensure every staff member is aware, trained and following written policies and procedures. Yet it has to be done. Consider tackling each department or area independently. So long as your review is completed within a reasonable timeframe, you are demonstrating a good faith effort at UDAAP compliance.

Be sure you are looking at these areas at a minimum:

  • Marketing
  • Sales scripts
  • Loan servicing (mortgage especially)
  • Product and service agreements and disclosures
  • Debt collection
  • Complaints and responses to those complaints

Fair Lending

For credit unions, compliance with fair lending is becoming more complex. Not because of any changes to the regulations but because multiple enforcement actions have changed the way lenders have to think about fair lending. Complex algorithms are used to uncover potential fair lending violations with regard to approvals and denialsas well as to the terms and conditions of a loan.

Credit unions may:

  • Consider moving from manual to automated loan approvals to avoid any perception of bias.
  • Review loan programs to ensure they are not intended for only a certain demographic.
  • Design inclusive marketing campaigns.
  • Train, train and retrain staff.

A colleague of mine recently characterized these five focus areas as “something old, something new.” BSA, fair lending and UDAAP – long-standing areas of significance for credit union compliance teams – are paired with the new TRID and Cybersecurity. This mix may bode well for credit unions, as some of these five areas very well could be in good shape. The trick is to ensure they stay that way while also setting strategy for emerging areas. With focus and prioritization, it can be done, and credit unions will continue to be the best choice for consumers shooting for financial success.

Jason SkempJason Skemp is manager of compliance solutions for PolicyWorks, a national leader of credit union compliance solutions. He can be reached at

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