NCUA adjusts surveillance expectations due to coronavirus crisis

Official seal of the NCUA. (Source: NCUA)

NCUA surveillance efforts in 2021 will be adjusted to take into account the continuing coronavirus crisis, NCUA President Rodney Hood said in a letter to credit unions.

“The NCUA remains committed to incorporating efficiencies into its review and oversight program to address the effects of the COVID-19 pandemic on credit unions and their members,” Hood wrote.

Hood said the agency will maintain its commitment to its extended review cycle. The targeted small credit union review program will remain in place for most federal credit unions with assets below $ 50 million, he said. For all other credit unions, NCUA examiners will conduct risk-based reviews, focusing on the highest risks.

Hood went on to point out areas that reviewers will focus on and areas that could be put on the back burner.

Allowance for loan and rental losses

Hood said that due to the economic impact of the coronavirus and the Financial Accounting Standards Board ruling until January 2023, NCUA examiners will delay assessing a credit union’s transition to the standard. Current Expected Credit Losses.

Bank Secrecy Law / Anti-Money Laundering Compliance

The agency will continue to perform BSA / AML reviews during each review, focusing on the implementation of appropriate client due diligence, beneficial ownership procedures and proper filing of reports, according to Hood.

Help and relief against the coronavirus

Reviewers will continue to review compliance with laws related to the pandemic, Hood wrote. Reviewers will continue to review credit reporting, forbearance and foreclosure changes that have been made as part of the economic aid legislation, the president wrote.

Financial consumer protection

The agency will continue to review compliance with consumer financial protection rules during each review, according to Hood. These reviews will be largely risk-based and based on a credit union’s compliance record and products and services.

NCUA board member Todd Harper, who will likely become chairman of the NCUA board under President Biden, said the agency needs to focus more on consumer protection.

This year, consumer protection reviews will focus on fair loans and areas related to the pandemic, Hood said.

Credit risk management

Hood said NCUA examiners would not criticize efforts by credit unions to provide “prudent” relief to borrowers, as long as those efforts “are conducted in a reasonable manner with proper controls and management oversight.”

The examiners will focus on reviewing the loan underwriting and credit risk management procedures of credit unions. The examiners will also verify that credit unions assess the potential impact of their response to the pandemic on their capital position and financial stability, according to Hood.

Cyber ​​security

The agency has moved away from the old Cyber ​​Security Assessment Toolkit (ACET) cybersecurity maturity assessments to drive the IT risk review for credit unions. This new system establishes a system consistent with other community financial institutions, Hood wrote.

LIBOR transition

Hood said the agency would continue to encourage credit unions to prepare for the planned end of the London Interbank Offered Rate (LIBOR). He said credit unions that have LIBOR-based transactions should not delay their preparation for the transition away from LIBOR, as the transition can be a “big and complex undertaking.”

Liquidity risk

Hood warned that the economic impact of the pandemic could lead to increased volatility in stock balances, loan demand and loan losses. The stress on credit union balance sheets could require an increased level of liquidity management throughout the year, he added.


The NCUA will continue to encourage credit unions to determine whether they are able to serve hemp-related businesses in their membership areas, Hood said.

“Credit unions that choose to serve hemp related businesses should understand the complexities and risks involved and obtain the expertise and resources to conduct this business safely and in compliance with all applicable laws and regulations.” , did he declare.

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