FFIEC Supplement on Internet Banking CLASS 2 December 15

Sample It’s Me 247 Risk Assessment 01

If your credit union is willing to share your It’s Me 247 Risk Assessment, please send it to me at Jspenski@cuanswers.com. I will insert a link to your sample here on the Audit Link site.  Be sure to let me know if you would like your name removed before posting.

FFIEC Supplement on Internet Banking

Keep an look out for announcements on the upcoming webinar in December!

The Network Compliance Teacher Newsletter will be produced by the Audit Link team but contain a number of articles written by other network compliance professionals. Topics will be chosen each quarter by the CU*Answers core compliance group. A major focus will revolve around the use of the CU*BASE tool to drive efficiencies and understanding of how the tool can be used to achieve regulatory requirements.

As an added incentive, credit unions whose work is published in the newsletter will receive a $250 credit on their next invoice. We expect at a minimum two credit union compliance professionals as authors for each publication. Your shared knowledge and experience will not only benefit your credit union directly, but you will add to the collective wisdom of the network.

Those credit unions wishing to contribute will be asked to submit their content by a certain date. Most newsletters will be anywhere from four to eight pages in length (1,000 – 2,000 words) and be structured as an educational tool related to regulations, current examination concerns, and industry best practice. The publication will be free to all network credit unions to review and distribute internally to staff as a guide for staff meeting presentations. Also, we will publish the content on the Audit Link Advisor site if you would like to use pieces of the publication and produce your own internal newsletter.

A core group of credit unions have already stepped up to the plate and are prepared to provide topics and content for the Network Compliance Teacher Newsletter. If you are not one of them please discuss with your CEO and let us know that you are interested in participating in this collaborative. Our first meeting will be scheduled for early next week to develop the list of topics and we expect to have our first publication out by the end of the month, so please contact Jim Vilker immediately if you want to participate—jvilker@cuanswers.com. Even if you decide not to participate directly, we hope you’ll enjoy and take advantage of this new quarterly newsletter.

Network Compliance Teacher Newsletter, 1st edition.

The Audit Link team stated that its suite of services is designed to reduce the added work imposed by seemingly endless regulations and compliance issues facing credit unions today. Changing conditions and factors inherent in on-going regulation changes have mandated continuous training and frequent exposure to compliance considerations with applied auditor solutions. According to a representative, future forecasts continue to indicate an even greater focus upon these areas, with stringent penalties for violators. It said this has placed an even requirement of accountability upon a credit union staff to assure these regulatory requirements are being met.

Audit Link added that in addition to an initial credit union meeting for helping determine the status and level of service desired, its dedicated team provides each credit union with an Executive Summary stating the on-going auditing activities performed, and their outcomes. They stated they then provide written recommendations designed to improve internal credit union processes, on-going procedures and staff training.

Audit Link claims its prices charged for its service is a small fraction of what is traditionally seen in the credit union industry, and that most clients for which it performs services have saved many thousands of dollars as compared to alternative providers, updating internal credit union procedures performed and or performing daily monitoring/ reporting management services.

-Adverse Action Notice – Reg B Webinar, July 21, 2011.

Adverse Action Notice – Reg B PDF

 -Many of you were looking for the credit bureau risk scoring reasons. Wendy Gillies was nice enough to forward Audit Link a copy of her list. See the link below.

Credit Score Rating 2

*Updated July 22, 2011* 

We made the following changes to the Adverse Action Notice based on your feedback from the webinar:

• The verbiage “We are unable to offer credit for the reason shown under below…”. Removed “under”.
• Added a line under the CRA for the credit union to enter a website.
• Increased the field size for the applicant name.
• Added an additional line for the member address.
• Added a line for the CU website.

Adverse_Action_Notice_PDF

 *Updated 8/26/11*

The Adverse Action OnDemand video

According to the Grand Rapids-based CUSO of CU*BASE data processing and other services, the Risk Management Report Generator is a template designed to assist credit unions in completing the three phases (Risk Assessment & Planning, Due Diligence, Risk Management and Monitoring) of the evaluation process as related to their relationships with CU*Answers and other network partners. The Risk Management Matrix tool, launched in February of this year is designed to provide quantitative risk analysis for due diligence on new opportunities.

For more information on these tools or the other services provided by CU*Answers and network partners designed to assist credit unions with regulatory compliance, visit the Audit Link website at http://auditlink.cuanswers.com/

Effective July 21, 2011, section 1086 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amends the Expedited Funds Availability Act by increasing the amount from $100 to $200 that must be available for withdrawal by opening of business on the next day. Your credit union will need to review your disclosures relating to Reg. CC (especially those using model forms C-3, C-4, or C-5) and make sure you update them to read $200 instead of $100. Once the changes are made, credit unions are required to send existing members a notice no later than 30 days after the change has been implemented.  

 As of June 12, 2011 all online credit unions received the 11.2 release that included the Reg. CC changes.

Here is a section from the Federal Register:

IV. Dodd-Frank Act Amendments

A. EFA Act Dollar Amounts

Section 1086 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amends the EFA Act by increasing from $100 to $200 the amount of deposited funds that banks must make available for withdrawal by opening of business on the next day.30 The effective date of this provision of the act is the ‘‘designated transfer date,’’ which the Secretary of the Treasury has determined to be July 21, 2011.31 This provision of the EFA Act is implemented in § 229.10(c)(1)(vii).  Additionally, the model disclosure forms set forth in current appendix C reflect the requirement that a bank must make $100 of the deposit available on the next business day. When the Dodd-Frank Act’s increase to $200 becomes effective, banks should ensure that their disclosures reflect the new funds availability schedule and that customers are notified of the changes in policy in accordance with § 229.18(e). Specifically, effective July 21, 2011, a bank basing its funds-availability disclosure on current model C–3, C–4, or C–5 must ensure that its disclosure indicates that the first $200 (rather than $100) of a check deposit will be available on the next business day after the day of deposit.32 Section 1086 amends the EFA Act to require the Board, jointly  with the Bureau of Consumer Financial Protection (Bureau), to update the dollar amounts to reflect inflation every five years after December 31, 2011.33 These amounts include the amount of funds a depositary bank must make available from a deposit of a check not subject to next-day availability (§ 229.10(c)(1)(vii)), by cash or similar means (§ 229.12(b)), and under the new account and large-deposit exceptions (§§ 229.13(a) and (b)). These amounts also include the EFA Act’s damage limitations (§ 229.21(a)). To facilitate future amendments to the regulation in this regard, the proposed amendments minimize the number of references to specific dollar amounts. For example, in the future, the $100 (which increases to $200 as of the transfer date) mentioned above would be considered ‘‘the minimum amount of a deposit that must be made available on the next day.’’ The Board plans to seek comment on proposed methods of indexing the amounts to inflation jointly with the Bureau at a later date.

For a copy of the entire document, click here.

As part of the daily monitoring that Audit Link offers, here are a few suggestions that may help reduce or eliminate abuse of dormant accounts at your Credit Union:

• Monitor dormant activity reports daily (PDRMTR report in CU*Spy).
• Watch for large transaction,  both deposit and withdrawals, to review for atypical activity.
• Verify signatures to ensure the member was the actual patron.
• Create a segregation of duties policy. You should not have individual performing transactions on dormant accounts also updating their dormant status.

For the full article, following the link below.

Prison Looms for Couple Accused of Embezzling From Small Credit Union

Held at the CU*Answers offices in Grand Rapids, Michigan, the Collections Roundtable is an open forum discussion on collections laws, internal procedures and CU*BASE processes. According to the CUSO, this provides a chance for staff to learn from network partners and is open to all staff, not limited to the Lending and Collections departments of credit unions.

To review Roundtable course details, access the registration page at http://cuanswers.com/education/syllabi/?course=SE.51.

                                                               Good Director Practice I – Fundamentals

The language of EFTA requires an ATM customer be told up-front when a fee will be charged, how much the fee is, and the opportunity to cancel the transaction. Some of the lawsuits are class actions, which in theory could mean all of a credit union’s ATM customers may qualify for reimbursement.

http://www.ncua.gov/Resources/RegulatoryAlerts/Files/Prior2003/01-RA-06.pdf

http://www.fdic.gov/news/news/financial/2009/fil09066.html

http://www.cutimes.com/2011/01/13/big-spike-seen-in-atm-fee-disclosure-lawsuits

The e-Statement Compliance Tax

E-Statements are a major cost-reduction service but are not a once-and-done type of offering.   According to a recent article by attorney Brian Witt, this service comes with a compliance tax.  This tax comes in the form of understanding and keeping abreast of a few regulations including Regulation E, Regulation Z, e-sign act, and TIS.  

I have attached a copy of a recent web post related to auto enrolling members into e-statements without them giving the credit union an electronic affirmative consent.  This document is written as if this attorney’s interpretation is correct and is intended to give guidance on the proper management of the e-statement services.  Many CEOs that read this may become upset as this potential compliance risk has been weighed in the past and is now being challenged and publicized.

My only recommendation to those CEOs is to read on, speak with your own compliance attorney, and make sure you have a legal opinion on your process to justify your interpretation, if different from this one.

Say your practice is to enroll members by utilizing the opening workflow functions in CU*BASE in order to keep your e-statement penetration up.  To manage this in accordance with the opinion listed above you would need to pull the e-Statement enrollment report (menu MNRPTE option #19) and on the drop-down select “1 Not accepted the Use Agreement” prior to the end of the month.  The members listed on this report are those who you have physically enrolled but have not accepted the use agreement via It’s Me 247 online banking. 

When you pull this report you do have the capability to export the file.  Why?  Perfect opportunity to use the Member Connect email option and send this group of members an email with a link to online banking reminding them to log on accept the agreement.  You can also use Member Connect to populate a telemarketing group for outbound calls and call them directly. 

Those who do not accept the agreement would need to be un-enrolled. 

Projects on Tap at CU*Answers

To make the un-enrollment process even easier, our development team is working on specifications to add a new feature to CU*BASE that would help you un-enroll a batch of members from e-Statements according to your desired measurement (i.e., members who have not accepted the Use Agreement, or who have not logged on recently, or even those who have a bad email address).  Watch for a special announcement and a new page on the Kitchen coming soon.

A final note on the author of the attached publication:  Brian Witt is one of the best credit union compliance attorneys in the country and has worked closely with both CU*Answers and CU*NorthWest clients on issues related to compliance, loan forms, and working with regulatory bodies.Farleigh Wada Witt 3-4-11-Newsletter