As Greenwood Credit Union in Warwick, R.I., continues to grow and add products and services, its compliance demands increase correspondingly.
To cope, the $470 million asset credit union turns to teamwork and partnerships, says CEO Fred Reinhardt.
Greenwood recently was approached to offer banking products related to Marijuana Related Businesses (MRB) in accordance with the state’s medical marijuana program. While this presented an opportunity, it also added an element of risk.
Before serving MRBs, the credit union established a program that allowed it to serve these businesses while complying with regulatory requirements and best practices. It designed its policies, procedures, risk assessments, and other tools to manage the risks involved with MRB accounts.
As a result, Greenwood can provide banking services to an underserved market while managing the risk and compliance requirements.
The credit union won a 2017 Compliance Impact Award from CUNA among credit unions with $100 million to $500 million in assets. The award recognizes credit unions that demonstrate how their compliance efforts have minimized or eliminated reputational, financial, or operational losses.
Reinhardt explains Greenwood’s award-winning compliance efforts.
CU Mag: What does winning the Compliance Impact Award mean to you?
Reinhardt: Winning the Compliance Impact Award is a great accomplishment for Greenwood Credit Union.
It is a wonderful recognition of the hard work and coordinated effort that went into this initiative. The award recognizes the role compliance plays in serving our members and running our credit union.
CU Mag: How do you keep up with compliance demands as your CU grows?
Reinhardt: It’s all about teamwork and partnerships. Credit union employees work closely with our compliance officer to stay aware of new regulations and then institute the required practices.
In addition, the credit union has a compliance committee that meets on a quarterly basis to discuss any implemented changes and track ongoing projects and any upcoming compliance needs.
We also rely on our business partners like CUNA to help us stay compliant as new regulations are introduced.
CU Mag: What challenges are involved in serving MRBs?
Reinhardt: Currently, the credit union only accepts MRB deposit accounts and does not engage in any lending activity.
Our overall objective is to meet the businesses needs of these members in a manner that will allow them to operate efficiently, but will also keep the credit union compliant with state requirements and federal guidelines.
To address the ongoing compliance challenges, the credit union relies on guidance issued by various federal agencies, discussions with our state regulator, and networking with other credit unions that serve MRBs.
CU Mag: Which regulation would you most like to see overhauled?
Reinhardt: If a particular regulation were to be singled out, we would like to see Regulation D [which covers depository institutions’ reserve requirements] repealed or amended.
It causes a fair amount of burden to the credit union in terms of monitoring and member notice, but does not appear to provide much value otherwise.
In addition, a revision of the Currency Transaction Report threshold would be beneficial. While it’s not a regulation per se, institutions are likely generating numerous regulatory reports that create a significant amount of “noise” that may defeat the original purpose of the reporting requirement.
By adjusting the threshold upward, the reporting burden would be reduced at the institution level while, arguably, generating more meaningful data for use by regulators and law enforcement.
CU Mag: What topic should compliance professionals place squarely on their radar for 2018?
Reinhardt: While HMDA [Home Mortgage Disclosure Act] reporting is a hot topic, in light of recent data breaches, we would encourage compliance professionals to remain in-tune with all aspects of safeguarding member information in general and cybersecurity in particular.
► Keep current with Bank Secrecy Act changes by attending the CUNA Bank Secrecy Act Conference Nov. 12-15 in Las Vegas
Bill Merrick is deputy editor of Credit Union Magazine. Follow him on Twitter via @CUMagazine.