In August of 2018, the NCUA issued a letter to Credit Union CEOs and Boards of Directors regarding examination guidance for Bank Secrecy Act (BSA) customer due diligence(CDD) and ultimate beneficial ownership (UBO) compliance. The letter (18-CU-02) explained to credit unions that the NCUA has issued examination procedures to field staff regarding the new CDD and UBO rules that went into effect earlier in 2018. The Credit Union Letter included an attached supervisory letter that provides all federally insured credit unions with examination expectations for NCUA examiners regarding conducting reviews of a credit union’s compliance with the new rules.
In their letter, the NCUA reminds credit unions of their requirements to comply with the new BSA/AML rules issued by the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), which were effective on May 11 of 2018. Among other things, these rules require financial institutions to identify and verify the identity of individuals (the beneficial owners) who own or control certain legal entity members, subject to a number of exclusions and exemptions. The NCUA explains that they have a consolidated BSA resource for credit unions to assist them with implementation of these rules.
Furthermore, the NCUA has provided the following statement regarding how examination teams will review the new BSA/AML rules:
“The NCUA recognizes that some credit unions may need additional time to implement changes and to fully comply with the new requirements. The NCUA examiners have been instructed to accept a credit union’s reasonable and good faith efforts to comply with the new rule throughout 2018. However, credit unions should understand that the NCUA’s acceptance of good faith efforts for supervision purposes does not shield a credit union from FinCEN penalties that could arise from failing to comply with all BSA/AML requirements.”
The entire credit union notice can be found here.