The NCUA remains committed to incorporating efficiencies into its examination and supervision program to address the effects of the COVID-19 pandemic on credit unions and their members. As the economic impact of the COVID-19 pandemic evolves, the NCUA will continue to provide the necessary guidance. Under its Letter to the Credit Unions, 21-CU-02 issued in January 2021, NCUA outlined its supervisory priorities for 2021.

The NCUA reiterated its commitment to focusing its examination activities on the areas that pose the highest risk to the credit union industry and the National Credit Union Share Insurance Fund. NCUA will maintain its commitment to the extended examination cycle, and qualifying credit unions will be scheduled accordingly in 2021. The targeted Small Credit Union Exam Program exam procedures remain in place for most federal credit unions with assets under $50 million. For all other credit unions, NCUA examiners will conduct risk-focused examinations, which concentrate on areas of highest risk, new products and services, and compliance with applicable laws and regulations.

The NCUA’s primary areas of supervisory focus with respect to compliance are:

Consumer Financial Protection: The NCUA will continue to examine for compliance with applicable consumer financial protection regulations during every federal credit union examination. The scope of each examination’s consumer compliance review is largely risk-focused and is based on the credit union’s compliance record, products and services provided, and any new or emerging concerns. In 2021, examiners will focus on areas related to the COVID-19 pandemic and a credit union’s Fair Lending Compliance Management System, including areas such as board and management oversight, policies and procedures, training, monitoring and corrective action, and member complaint response.

Bank Secrecy Act/Anti-Money Laundering Compliance: NCUA will continue to conduct Bank Secrecy Act/ Anti-Money Laundering (BSA/ AML) reviews during every examination and will take appropriate action when necessary to ensure credit unions meet their regulatory obligations. For additional resources, visit the NCUA’s Bank Secrecy Act Resources webpage.

Serving Hemp-Related Businesses: The NCUA will continue to encourage credit unions to consider whether they are able to provide financial services to lawfully operating hemp-related businesses within their fields of membership safely and properly. Credit unions that choose to serve hemp-related businesses need to understand the complexities and risks involved and secure the necessary expertise and resources to conduct this activity safely and soundly and in compliance with all applicable laws and regulations.

Coronavirus Aid, Relief and Economic Security Act (CARES Act): For examination purposes, examiners will continue to review compliance with the provision of the CARES Act that suspended the requirement to categorize certain loan modifications as troubled debt restructurings or TDRs, which was extended, through January 1, 2022. Additionally, NCUA noted that examiners will continue to review, as needed, modifications, credit reporting, forbearances, and foreclosures that were conducted in 2020 under CARES Act provisions. For more information, see NCUA Letter to Credit Unions 20-CU- 07, Summary of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and NCUA Letter to Credit Unions 21-CU-01, Summary of the Consolidated Appropriations Act, 2021.

LIBOR Transition: Examiners will continue to educate credit unions on the transition in 2021, particularly those with significant LIBOR exposure or less-developed transition processes. For these credit unions, examiners will assess exposures to LIBOR and the safety and soundness of the credit unions’ preparation plans to transition to an alternative reference rate. Credit unions can continue using NCUA’s LIBOR Assessment Workbook (opens new window) for assistance in planning for the transition and refer to the July 2020 Interagency Statement for additional guidance.

The NCUA will be incorporating the use of an Exam Planning Questionnaire into the examination planning process. The questionnaire will provide NCUA examiners with information on certain products and services, significant events, insider activities, and fraud awareness.

NCUA examiners will provide the questionnaire to credit unions in advance of a scheduled exam and will use the responses to refine the exam scope, increase offsite-monitoring capabilities, and incorporate efficiencies to the exam. More information on the pilot of the Exam Planning Questionnaire will be forthcoming.

For further information or questions about the NCUA’s supervisory priorities for 2021, contact your NCUA regional office or state supervisory authority.

 

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