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| NCUA Releases 2022 Supervisory Priorities, Continues Remote Examinations |
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The NCUA Tuesday released its 2022 supervisory priorities in a Letter to Credit Unions. Several of the priorities were mentioned in NCUA's Budget Justification for 2022-23. NCUA stated it will continue to conduct examinations and supervision activities on the areas that pose the highest risk to credit unions, their members, and the National Credit Unions Share Insurance Fund (SIF), for the most part remotely.
Under the priorities, NCUA examiners will continue to focus on credit unions’ management and mitigation of credit risk, looking at whether credit unions maintain sound lending practices. Examiners will look at areas related to the COVID-19 pandemic, fair lending, the Servicemembers Civil Relief Act, as well as overdraft programs, a focus area on the current administration.
Regarding loan participations, the NCUA also states that examiners will “verify that credit unions have evaluated the risk in the loan participation transactions and how that risk fits within the tolerance levels established by the credit union’s board.” According to the NCUA’s fall rulemaking agenda, the agency plans is considering a proposed rulemaking to update the participation and eligible obligation rules sometime during this year.
Other supervisory priorities for 2022 include:
• payment products, services, and operations, which are a growing area of complexity and risks for credit unions and consumers;
• cybersecurity and information security;
• Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) , noting interagency partner coordination with other banking regulators and law enforcement to improve related filings and compliance programs;
• capital adequacy standards and risk based capital rule implementation;
• LIBOR transition;
• the CECL standard, which isn’t set to take effect for credit unions until 2023; NAFCU has urged the Financial Accounting Standards Board (FASB) to exempt all public non-filers, including credit unions; and
• interest rate risk.
NCUA updated the credit unions’ use of the agency’s new Modern Examination and Risk Identification Tool (MERIT) and the adoption of the "S" component in the CAMELS rating system. The agency last year trained all NCUA and state regulator users to use MERIT and has set aside time this year for examiners to work with credit unions about using MERIT and the related online examination tools.
NAFCU's Compliance Team will continue to review the supervisory priorities and provide credit unions with additional insights in Wednesday’s Compliance Blog post.
Copyright 2022. NAFCU. (link) |
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