CUNA Attorneys Conference: Updates provided on BSA reqs, corporate CUs

October 21, 2014

DANA POINT, Calif. (10/22/14)--Bank Secrecy Act (BSA) issues and National Credit Union Administration (NCUA) regulations were highlighted during sessions at the Credit Union National Association Attorneys Conference this week.

T. Wayne Hood, senior vice president and general counsel at ORNL FCU, Oak Ridge, Tenn. with $1.5 billion in assets, spoke about the latest developments in BSA compliance. Most notably, he addressed some of the popular misconceptions about offering financial services to legal marijuana-based businesses.

Hood said the U.S. Department of Justice seems to believe that it is not good use of resources to go after financial institutions whose actions are in clear compliance with existing state laws if priorities such as preventing distribution of marijuana to minors and preventing revenue from marijuana sales from going to criminal enterprises are met.

It is very difficult to offer services to such businesses, and to do so requires a robust BSA compliance program, Hood emphasized.

Some in the room said it is possible. A representative from $1.3 billion-asset Numerica CU, Spokane Valley, Wash. said that credit union is currently offering services to legal marijuana-based businesses, so it is possible to comply with BSA requirements while serving the businesses.

This led to a discussion among attendees about the pros and cons of serving such businesses.

Also at the conference, an update on corporate credit union cases was provided by John Ianno, NCUA senior associate general counsel. He said five corporate credit unions have settled for a reported $1.6 billion, and there are 15 active suits that are currently in the discovery stage of litigation. 

The NCUA is making these recoveries in its role as conservator for the corporate credit unions. The proceeds are used by the agency to reduce or eliminate natural person credit union assessments to repay the U.S. Treasury loans to the National Credit Union Share Insurance Fund during the financial crisis.

Ianno said the NCUA predicts that damages in those remaining cases will be in the billions, and that the agency is committed to seeing those through, with the goal of recovering more for the credit union system.

Pamela Yu and Sarah Chung of the NCUA discussed the agency's recent letter regarding contractual agreements with credit union service organizations (CUSOs). The requirements only apply to contractual agreements relating to CUSOs that a credit invests in or loans to, not CUSOs who solely provide services to the credit union.

Yu and Chung also provided updates on various NCUA rulemakings, including proposals regarding fixed assets, bylaws and appraisals. CUNA General Counsel Eric Richard highlighted the agency's risk-based capital proposal during his remarks and answered questions about the proposal following his speech.