Credit Union Training Guide - League InfoSight

LCUL Training Guide 2/2013 1

Credit Union Training Guide

Required and/or Recommended Training for Credit Unions

The Louisiana Credit Union League is pleased to present you with this informational guide to the

many training topics that are either required or strongly recommended for your employees and

volunteer officials. The following guide is intended to outline the training required by federal

regulations and more specifically the NCUA Rules and Regulations, as well as relevant training

topics that may not be technically required by a regulation but that are strongly recommended.

Examiners will expect credit union staff to be properly trained and to comply with all regulatory

requirements that relate to their particular job responsibilities including initial training for new hires

and ongoing training for existing employees. The level of training required and recommended will

vary based on the job function. For those areas where training is not required by statute or

regulation we believe that in many cases training is a sensible thing to do.

In order for staff to successfully perform their jobs in a fully compliant manner, it is imperative that

credit union employees understand what the requirements are and why they are necessary. We are

convinced that the cost associated with training staff and volunteers is a much better investment of

resources than the cost of potential fines that can be levied, public relations problems and reputation

risk that could result from noncompliance.

Disclaimer: This guidance is provided for informational purposes only. Credit unions are strongly encouraged to

thoroughly review all applicable regulatory and statutory requirements related to training. Operations vary dramatically

from one credit union to the next and it is up to each individual credit union to determine the types and frequency of

training that is appropriate for their institution. This list is not all inclusive. The inclusion or exclusion of a topic on

the list does not mean you may or may not need training on that particular topic.


Table of Contents

Asset Liability Management (ALM) .......................................................................................................... 4

Bank Secrecy Act & Anti-Money Laundering ........................................................................................ 5

Board of Directors Duties and Responsibilities..................................................................................... 7

Board of Directors Financial Literacy ....................................................................................................... 8

Compliance Program ..................................................................................................................................... 9

Disaster Preparedness ................................................................................................................................. 10

Discrimination in Lending ......................................................................................................................... 11

E-Sign Act ....................................................................................................................................................... 12

Equal Credit Opportunity Act (Regulation B) ..................................................................................... 13

Equal Employment Opportunity (EEO) ............................................................................................... 14

Expedited Funds Availability Act (Regulation CC)............................................................................ 15

Fair Debt Collection Practices Act ........................................................................................................... 16

Fair Housing Act ........................................................................................................................................... 17

Fair Mortgage Lending Practices............................................................................................................. 18

Flood Insurance ............................................................................................................................................. 19

Identity Theft Red Flags ............................................................................................................................. 20

Information Security – Member Privacy ................................................................................................ 21

Member Service Representative Training ............................................................................................. 22

Security ............................................................................................................................................................. 23

Servicemembers’ Civil Relief Act ............................................................................................................. 24

Small Business Administration (SBA) Lending ................................................................................... 25

Supervisory Committee Duties and Responsibilities ......................................................................... 26

Truth in Lending (Regulation Z) ............................................................................................................. 27

Truth in Savings Act (Regulation DD) ................................................................................................... 28

Other Considerations ................................................................................................................................... 29


Asset Liability Management (ALM)

REQUIRED OR RECOMMENDED Strongly recommended for all members of the Asset-Liability Committee (ALCO), at a minimum, as well as the ALM program person at the credit union. BACKGROUND INFORMATION Asset liability management (ALM) is the practice of managing risks that arise due to mismatches between the assets and liabilities (debts and assets) of the credit union. Credit unions face several risks such as the liquidity risk, interest rate risk, credit risk and operational risk. ALM is a strategic management tool to manage interest rate risk and liquidity risk faced by credit unions. The field of ALM is dynamic, demanding a current knowledge of risk measurement techniques, and risk mitigation strategies. This can be accomplished, in part, by frequent training on current issues. TRAINING TIPS

As the degree of balance sheet complexity increases, so should the amount of training attended by ALCO members.

Training should be timely so the members have a current knowledge of techniques and strategies.

If weaknesses are observed in the credit union's ALM process, this may signal a need for training.

Not only should a back-up person be assigned to promote continuity in the risk measurement process, but also the back-up should be fully trained on the model.

REFERENCES NCUA ALM Guidance (http://www.ncua.gov/Resources/CUs/ALM/Pages/default.aspx)

Federal Credit Union Act, 12 USC § 1756

Federal Credit Union Act, 12 USC § 1784

http://www.ncua.gov/Resources/CUs/ALM/Pages/default.aspx


Bank Secrecy Act & Anti-Money Laundering REQUIRED OR RECOMMENDED Required for all personnel to receive “annual” and “ongoing” training. Many credit unions perform quarterly or monthly training. It is expected by examiners that all parties receive training on some level, including the board of directors. BACKGROUND INFORMATION The Bank Secrecy Act of 1970 (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) requires U.S.A. financial institutions to assist U.S. government agencies to detect and prevent money laundering, tax evasion and other criminal activity. The BSA is a combination of various statutes that require credit unions to record and retain certain records, as well as report certain financial transactions to the federal government. TRAINING TIPS

An overview of BSA/AML requirements should be given to new staff. You should never place a new hire on the premises until they have had basic BSA training.

Provide training for board members. The training for board members does not need to be as in-depth as the training for staff, but board members should have a good understanding of what BSA is and its purpose, the credit union’s requirements and consequences for noncompliance, and risks posed to the credit union.

Incorporate BSA compliance into job descriptions and performance evaluations.

Train all employees to be fully aware of their responsibilities under the BSA regulations and internal policy guidelines. Training should include regulatory requirements and the credit union’s internal BSA/AML policies, procedures, and processes. At minimum, the training program must provide training for all personnel whose duties require knowledge of BSA.

Training should be tailored to a person’s specific responsibilities. Examples of money laundering activity and suspicious activity monitoring and reposting should be tailored to each individual audience. It is important that your training program educate employees about types of money laundering schemes and recordkeeping and reporting requirements, such as the completion of CTRs and SARs.

The type, breadth, and frequency of appropriate BSA training will vary between credit unions. To determine the kind of training that is appropriate for your credit union, you should evaluate the frequency of staff turnover, kinds of transactions handled by your credit union, types of products offered to your membership, and whether your credit union is located in a high risk money laundering and related financial crimes area (HIFCA) or high intensity drug trafficking area (HIDTA). A list of HIDTAs is maintained at the following web site: http://www.whitehousedrugpolicy.gov/hidta/index.html. At the time of publication, HIDTAs in Louisiana include the following parishes: Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Orleans and Ouachita Parishes

In addition to BSA, a credit union should also conduct regular training on OFAC. Employees should understand the purpose of the SDN list and how to evaluate whether a transaction will be subject to OFAC requirements.

http://www.whitehousedrugpolicy.gov/hidta/index.html


Document your training programs. Training and testing materials, the dates of training sessions, and attendance records should be maintained by the credit union and be available for examiner review.

LCUL provides annual BSA training for staff and volunteers at no charge as a dues-supported service to all member credit unions. For more information, contact your member services consultant.

REFERENCES

Joint Guidance: NCUA, FDIC, FRS, OCC, OTS and FinCEN

Bank Secrecy Act [Section 5318(h)]

NCUA Rules and Regulations §748.2(b) & (c)

Money Laundering Control Act of 1986; Anti-Drug Abuse Act of 1986; Currency and Foreign Transactions Reporting Act; Financial Recordkeeping and Department of Treasury's Reporting of Currency and Foreign Transactions rules; Title III of the USA Patriot Act

NCUA provides information about the Bank Secrecy Act on the NCUA web site, http://www.ncua.gov

FinCEN also provides information about BSA on its web site, http://www.fincen.gov under the Regulatory and Publication options

OFAC provides information about the SDN list and OFAC statutes on its web site, http://www.treas.gov/offices/enforcement/ofac/

NCUA Compliance Guide – BSA (http://www.ncua.gov/Resources/Documents/LCCU/LCCU2004-02.pdf)

LCUL Website (www.lcul.com) – Compliance Section

http://www.ncua.gov/

http://www.fincen.gov/

http://www.treas.gov/offices/enforcement/ofac/

http://www.ncua.gov/Resources/Documents/LCCU/LCCU2004-02.pdf

http://www.lcul.com/


Board of Directors Duties and Responsibilities

REQUIRED OR RECOMMENDED Recommended for all board members on a regular basis. BACKGROUND INFORMATION Regarding training for board members, NCUA’s model bylaws include the following language:

Section 6. Board responsibilities. The board has the general direction and control of the affairs of this credit union and is responsible for performing all the duties customarily performed by boards of directors. This includes but is not limited to the following:

(d) Establishing a policy to address training for newly elected and incumbent directors and volunteer officials, in areas such as ethics and fiduciary responsibility, regulatory compliance, and accounting and determining that all persons appointed or elected by this credit union to any position requiring the receipt, payment or custody of money or other property of this credit union, or in its custody or control as collateral or otherwise, are properly bonded in accordance with the Act and regulations.

TRAINING TIPS

New board members should be trained as soon as possible after elections.

Incumbent board members should also be retrained periodically.

Periodic training can be established by creating a training calendar, or incorporating training into the strategic planning process or chosen board meetings.

Documentation of the training conducted should be retained for board minutes.

LCUL provides board duties & responsibilities training at no charge as a dues-supported service to all member credit unions. For more information, contact your member services consultant.

REFERENCES

NCUA model bylaws

Your credit union’s bylaws

CUNA and Affiliates Handbook of Board Duties and Responsibilities

LCUL’s Board Duties, Responsibilities, and Liabilities training


Board of Directors Financial Literacy

REQUIRED OR RECOMMENDED Required for all board members within no more than 6 months of election BACKGROUND INFORMATION NCUA’s new rule governing fiduciary duties of federal credit union directors will take effect on January 27, 2011; and compliance with the financial literacy provisions will be required by July 27, 2011. All FCU directors—including current directors—must have the ability to read and understand their credit union’s balance sheet and income statement.

TRAINING TIPS

New board members must be trained within no more than 6 months after elections.

Directors must have at least a working familiarity with basic finance and accounting

practices

Directors must have the ability to read and understand their credit union’s balance sheet

and income statement

Directors must be able to ask, as appropriate, substantive questions of management and

the internal and external auditors

Current credit union directors have until July 27, 2011 to comply

REFERENCES NCUA Press Release (http://www.ncua.gov/News/Press/NW20101222FCUDirectorDuties.pdf)

CUNA (http://cuna.org/reg_advocacy/member/download/analysis_011411.pdf)

http://www.ncua.gov/News/Press/NW20101222FCUDirectorDuties.pdf

http://cuna.org/reg_advocacy/member/download/analysis_011411.pdf


Compliance Program REQUIRED OR RECOMMENDED Recommended for all credit union personnel as necessary to ensure compliance. BACKGROUND INFORMATION Keeping up with the many regulations and laws that affect a credit union is an often difficult but always necessary task. Credit union staff should stay up to date on the latest information and developments related to regulatory compliance. TRAINING TIPS

The credit union should have a process in place to ensure the compliance expert(s) receive continuing education on changes to applicable state and federal consumer compliance regulations.

It's always a good idea to maintain a regular compliance training schedule. Each regulation should be revisited periodically.

Management should have a reasonably comprehensive training program to ensure that credit union staff is properly trained on the applicable consumer compliance regulations.

REFERENCES

Louisiana Credit Union League website – InfoSight (www.lcul.com)

Louisiana Credit Union League Compliance & Research Department ([email protected] or (800) 452-7221, ext. 3024)

CUNA Compliance Services (www.cuna.org/compliance/index.html)



mailto:[email protected]

http://www.cuna.org/compliance/index.html


Disaster Preparedness REQUIRED OR RECOMMENDED Required that all credit union personnel and officials be provided with initial and periodic training as it relates to the DPR plan; should be at least annual. BACKGROUND INFORMATION Credit unions can experience a sudden disruption of their operations at any time. The disruption can be minimal, with a power outage for an hour or two, or major, where the building and its contents are destroyed through a sudden explosion or fire. The threats can be natural, human, or technical. Credit union’s contingency plans should consider a worst-case scenario and should assume that the credit union could not continue operating at its physical location, due to a natural disaster or some other unforeseen event, for an extended period. Training and communication before a disaster strikes is a critical part of the success of any plan. TRAINING TIPS

Must have appropriate training and documentation of training to ensure all employees and volunteer officials are aware of procedures to follow in the event of destruction of vital records or loss of vital member services.

Awareness by officials and staff is an important element of success. Quick reference information such as wallet cards can serve to supplement periodic training.

Training should be at least annual. Management may wish to simulate a disruption by suddenly changing employee duties to be certain the operations manual provides satisfactory instructions.

Regarding record retention as it relates to disaster preparedness, all employees and volunteer officials should receive training to ensure that they are aware of procedures to follow in the event of destruction of vital records or loss of vital member services.

REFERENCES

NCUA 12 CFR Parts 748 and 749

NCUA Letters to Credit Unions 08-CU-01; 07-CU-02; 06-CU-12; 06-CU-11; 06-CU-10; 06-CU-06; 01-CU-21

NCUA Risk Alert No. 06-Risk-01: Disaster Planning and Response

NCUA Information Systems and Technology (IS&T) Program and Exam Questionnaire



Discrimination in Lending REQUIRED OR RECOMMENDED Required for all affected personnel to ensure compliance. BACKGROUND INFORMATION The Policy Statement on Discrimination in Lending effective April 15, 1994 is a multi-agency statement that included the NCUA along with the Department of Housing and Urban Development ("HUD"), the Department of Justice ("DOJ"), the Office of the Comptroller of the Currency ("OCC"), the Office of Thrift Supervision ("OTS"), the Board of Governors of the Federal Reserve System (the "Board"), the Federal Deposit Insurance Corporation ("FDIC"), the Federal Housing Finance Board ("FHFB"), the Federal Trade Commission ("FTC"), and the Office of Federal Housing Enterprise Oversight ("OFHEO") (collectively, "the Agencies"). This statement came out of concern that some prospective home buyers and other borrowers were experiencing discriminatory treatment in their efforts to obtain loans. Discrimination in lending on the basis of race or other prohibited factors is destructive, morally repugnant, and against the law. It prevents those who are discriminated against from enjoying the benefits of access to credit. The Agencies will not tolerate lending discrimination in any form. Further, fair lending is not inconsistent with safe and sound operations. Lenders must continue to ensure that their lending practices are consistent with safe and sound operating policies. This policy statement applies to all lenders, including mortgage brokers, issuers of credit cards, and any other person who extends credit of any type. Training employees is mentioned three different times in this statement. TRAINING TIPS

Per the statement, credit unions have to provide training for employees involved in any problems detected during a self-test for compliance is an appropriate corrective action.

Lenders are required to ensure that appropriate staff members are familiar with required secondary market underwriting guidelines.

Requiring training for employees is listed as one of the enforcement tools available to the regulatory agencies.

REFERENCES

Policy Statement on Discrimination in Lending (www.fdic.gov/regulations/laws/rules/5000-3860.html)


http://www.fdic.gov/regulations/laws/rules/5000-3860.html


E-Sign Act REQUIRED OR RECOMMENDED Strongly recommended for all personnel to ensure compliance. BACKGROUND INFORMATION The E-Sign Act encourages the use of electronic signatures, electronic contracts and electronic records by establishing requirements and standards that when followed give legal validity to these electronic instruments. The E-sign Act provides that: 1) a signature, contract, or other record relating to a transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and 2) a contract may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation. The E-Sign Act neither requires private parties to use or accept electronic records or electronic signatures, nor does it mandate or recommend any specific technological standard. It permits the use of electronic records to provide required disclosures in electronic format rather than written format. In short, it allows the issuance of electronic records to satisfy any statute or regulation that requires written records, provided the consumer/member has previously agreed to accept the records electronically. The E-Sign Act also permits credit unions to satisfy statutory and regulatory retention of records requirements electronically, as long as the electronic form is accurate and capable of being reproduced for later reference. TRAINING TIPS

NCUA recommends that a credit union ensure that all departments are aware of all aspects of the E-Sign Act.

REFERENCES

Uniform Electronic Transaction Act (UETA)

FTC: Electronic Signatures and Global National Commerce Act of 2000

CUNA Compliance Guide – E-Sign

(http://www.cuna.org/compliance/member/eguide/eguide_esig.html)



Equal Credit Opportunity Act (Regulation B) REQUIRED OR RECOMMENDED Required for all affected personnel to receive ongoing training; no specific timetable given. BACKGROUND INFORMATION The Equal Credit Opportunity Act (ECOA), implemented by Regulation B (12 CFR 202), promotes availability of credit to all creditworthy applicants without regard to race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act. The basic rule of Regulation B, as found in §202.4, is: "A creditor shall not discriminate against any applicant on a prohibited basis with respect to any aspect of a credit transaction." The law applies to any person who, in the ordinary course of business, regularly participates in a credit decision, including credit unions. TRAINING TIPS

Provide training to all employees involved in any aspect of taking, evaluating, acting on a credit application, or furnishing/maintaining credit information.

Persons involved in marketing and credit operations should receive appropriate instruction and training relative to their responsibilities.

Reg B Commentary 202.15 (c) (2) states that “identifying and then training and/or disciplining the employees involved” is an appropriate corrective action for problems discovered as a result of a self-test for compliance with this regulation.

Many violations of the Equal Credit Opportunity Act involve discrepancies between written policies and the actual practices of employees involved in the lending process. By keeping your staff trained on those requirements, many of these discrepancies can be avoided. Training staff in appropriate fair lending and nondiscrimination practices is just good business.

REFERENCES

Regulation B (Equal Credit Opportunity Act)

Regulation B Commentary 202.15(c) (2)

CUNA Compliance Guide – Reg B: Equal Credit Opportunity Act (Regulation B)

(http://www.cuna.org/compliance/member/eguide/eguide_regb.html)


http://www.cuna.org/compliance/member/eguide/eguide_regb.html


Equal Employment Opportunity (EEO) REQUIRED OR RECOMMENDED Strongly recommended for all credit union personnel and officials. BACKGROUND INFORMATION Equal employment opportunity (EEO) laws prohibit specific types of job discrimination in certain workplaces. The Department of Labor has two agencies which deal with EEO monitoring and enforcement:

1. Civil Rights Center, a division of the Office of Assistant Secretary for Administration and Management (OASAM), which oversees EEO in programs and activities receiving federal financial assistance as well as assuring equal opportunity for all applicants to and employees of DOL.

2. The Office of Federal Contract Compliance Programs (OFCCP), a division of the Employment Standards Administration (ESA), which oversees employers holding federal contracts and subcontracts.

TRAINING TIPS

Credit unions subject to the EEO laws should establish, distribute to all employees, and enforce a policy prohibiting harassment and discrimination.

The credit union should also develop and distribute a complaint procedure. In most cases, the policies and procedures should be in writing.

All employees should attend anti-harassment training on a regular basis.

An employer should ensure that its supervisors and managers understand their responsibilities under the organization's anti-harassment policy and complaint procedures.

REFERENCES

Equal Pay Act of 1963 (http://www.eeoc.gov/laws/statutes/epa.cfm)

Title VII of the Civil Rights Act of 1964 (http://www.eeoc.gov/policy/vii.html)

Civil Rights Act of 1991 (http://www.eeoc.gov/policy/cra91.html)

Age Discrimination in Employment Act (http://www.eeoc.gov/policy/adea.html)

Equal Employment Opportunity Commission, 29 CFR 1600 et al.

U.S. Department of Labor EEO Summary (www.dol.gov/dol/topic/discrimination/)

Federal Laws Prohibiting Job Discrimination (http://www.eeoc.gov/facts/qanda.html)


http://www.eeoc.gov/laws/statutes/epa.cfm

http://www.eeoc.gov/policy/vii.html

http://www.eeoc.gov/policy/cra91.html

http://www.eeoc.gov/policy/adea.html

http://www.dol.gov/dol/topic/discrimination/

http://www.eeoc.gov/facts/qanda.html



Expedited Funds Availability Act (Regulation CC) REQUIRED OR RECOMMENDED Required for affected personnel to stay informed of their responsibilities. BACKGROUND INFORMATION The Federal Reserve Board’s Regulation CC implements the Expedited Funds Availability Act. Reg CC, which became effective September 1, 1988, sets forth time deadlines pertaining to when a financial institution must make deposited funds available to its customers and also sets forth rules to expedite the collection and return of checks through the banking system. Reg CC requires that credit unions disclose their hold policies to all account holders, and make the policy available in written form upon request by any member; it must also be provided at the time of opening of all new accounts. Financial institutions must establish procedures to ensure that the institution is in compliance with Reg. CC and that employees receive training on the requirements of the regulation. TRAINING TIPS

Credit unions must do whatever is necessary to inform employees performing tasks governed by this regulation of the requirements of the Act and establish and maintain procedures designed to ensure and monitor employee compliance with the requirements.

Each credit union shall establish procedures to ensure that the credit union complies with the requirements of Reg CC and shall provide each employee who performs duties subject to the requirements of this regulation with a statement of the procedures applicable to that employee. Credit unions must also make sure employees receive training on the requirements of this regulation.

Conduct training on a regular basis and monitor compliance with regulation.

Records and other evidence of compliance must be retained for at least two years. REFERENCES

Regulation CC Availability of Funds and Collection of Checks [225.19(f)]

CUNA Compliance Guide – Reg CC: Expedited Funds Availability (Regulation CC) (http://www.cuna.org/compliance/member/eguide/eguide_regcc.html)


http://www.cuna.org/compliance/member/eguide/eguide_regcc.html


Fair Debt Collection Practices Act REQUIRED OR RECOMMENDED Strongly recommended for affected personnel to ensure compliance. BACKGROUND INFORMATION The Fair Debt Collection Practices Act (FDCPA) is a federal law that was enacted in 1977 to curb abusive debt collection activity by some debt collectors. The law became effective on March 20, 1978. The law has been amended several times. Substantive amendments occurred in 1986 and 1996: 1986 - the FDCPA coverage was expanded to include attorneys; 1996 - the FDCPA requirement for providing debt collection warning notices was reduced from being required in all communications to only being required in the initial communication. However, the 1996 amendment also requires each communication to a debtor to disclose that it is from a debt collector. When collecting their own debts and using their own name, credit unions are not covered by the FDCPA. The FDCPA applies only to a person or institution that regularly collects or attempts to collect, directly or indirectly, consumer debt (debt incurred by an individual primarily for personal, family, or household purposes) owed to another person or institution. Business or agriculture debts are not covered. Officers or employees of a credit union who collect, in the credit union's name, debts owed to the credit union are not covered by the Act. However, the FDCPA does apply to credit unions that regularly collect debts for other unrelated institutions, and/or perform collections under reciprocal service agreements. Typically such agreements result from a credit union soliciting another credit union to assist in collecting a defaulted debt of a consumer who has relocated. This includes assistance in repossessing collateral. A credit union must also comply with the FDCPA if it uses a name other than its own when pursuing collections. TRAINING TIPS

The FDCPA is a particularly burdensome law with severe potential liability. Credit unions should determine that their collection activities are not, in any way, subject to the FDCPA requirements.

To assist credit unions in specific preventative measures to insulate themselves from FDCPA applicability, you should review all of your collection policies, manuals, training, practices, and procedures to determine if it is subject to the FDCPA.

If the credit union is not subject to FDCPA, the credit union should review all training materials in the collection area to identify references to the "FDCPA" or "federal" law, and adopt appropriate revisions to delete such references from the training materials.

When providing employees with FDCPA training, make sure the training is appropriate and if it training needs modification, retraining should be scheduled.

REFERENCES

Debt Collection Practices, 15 USC 1692

NCUA Compliance Guide – Fair Debt Collection Practices Act



Fair Housing Act REQUIRED OR RECOMMENDED Strongly recommended for all personnel involved in any aspect of residential real estate. BACKGROUND INFORMATION The Fair Housing Act (FHA) provides fair housing throughout the United States by regulating many practices relating to housing. In particular, FHA makes it unlawful for any lender to discriminate in its housing-related lending activities against any person because of race, color, religion, national origin, sex, handicap, or familial status. TRAINING TIPS

Although the law does not require training, it is strongly recommended that training be provided to all employees involved in any aspect of residential real estate, including the financing, selling, renting, advertising, brokering and appraising of housing.

Further, all employees should be provided with training on the basic principles and core requirements of FHA, along with other relevant fair lending laws and regulations.

REFERENCES

Fair Housing Act (42 USC 45)

Nondiscrimination Requirements, 12 CFR 701.31

Fair Housing, 24 CFR 100-125

NCUA Compliance Guide – Fair Housing Act (http://www.cuna.org/compliance/member/eguide/eguide_fha.html)


http://www.cuna.org/compliance/member/eguide/eguide_fha.html


Fair Mortgage Lending Practices REQUIRED OR RECOMMENDED Strongly recommended for all affected personnel to ensure compliance. BACKGROUND INFORMATION On October 9, 1992, the federal financial institutions regulatory agencies, including NCUA, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision, issued this statement to emphasize their concerns about fair treatment of applicants for mortgage loans and their continuing efforts to ensure such treatment. Increasing evidence indicated that differences in loan-approval rates between white and minority home mortgage applicants, apparently unwarranted by economic factors, characterize some lending. TRAINING TIPS

Lending personnel at credit unions may need additional information and training about fair lending laws, and greater sensitivity to cultural and racial differences among applicants for credit. Consumers need information about the credit-granting process — how it works and what is expected in order to be a successful applicant for mortgage credit.

In this regard, the agencies believe that additional effort to expand and intensify educational programs for both lenders and consumers will be required.

REFERENCES

Policy Statement on Fair Mortgage Lending Practices (http://www.federalreserve.gov/bankinforeg/interagencystatement.htm)

http://www.federalreserve.gov/bankinforeg/interagencystatement.htm


Flood Insurance REQUIRED OR RECOMMENDED Strongly recommended for all personnel to ensure compliance. BACKGROUND INFORMATION Part 760 of the NCUA Rules and Regulations implements the requirements of the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4129). NCUA regulations (12 C.F.R. Part 760) require flood insurance for the term of a designated loan that is secured by buildings or mobile homes and any personal property when such property is or will be located in a Standard Flood Hazard Area (SFHA), and the community in which the property will be located participates in the National Flood Insurance Program (NFIP). TRAINING TIPS

NCUA recommends that credit unions offer training sessions for employees on current flood insurance requirements.

As policies are updated to ensure consistency with the Act and NCUA regulations, staff should receive updated training.

REFERENCES

National Flood Insurance, 42 USC 50

Loans in Areas Having Special Flood Hazards, 12 CFR 760

NCUA Compliance Guide – National Flood Insurance Act / Flood Disaster Protection Act (http://www.cuna.org/compliance/member/eguide/eguide_floodins.html)


http://www.cuna.org/compliance/member/eguide/eguide_floodins.html


Identity Theft Red Flags

REQUIRED OR RECOMMENDED Required for all affected personnel to ensure compliance. BACKGROUND INFORMATION Section 114 of the FACT Act requires that financial institutions and other creditors that offer or maintain “covered accounts” develop and implement a written identity theft protection program that is appropriate to the size and complexity of each credit union. TRAINING TIPS

The FACT ACT identity theft red flag regulations require periodic training to keep staff up to speed on the credit union’s ID theft policies and procedures.

The rules provide that a covered entity must train relevant staff, as necessary, to effectively implement the Program.

REFERENCES

Fair and Accurate Credit Transactions Act, Section 114



Information Security – Member Privacy REQUIRED OR RECOMMENDED Required for personnel to receive adequate and regular training; “all staff” is inferred. BACKGROUND INFORMATION The Financial Services Modernization Act, known as the Gramm-Leach-Bliley Act (Act) addresses “Disclosure of Nonpublic Personal Information.” The privacy regulations, Part 716, issued as part of the NCUA Board of Directors Rules and Regulations closely follow the requirements of this part of the privacy law. The privacy rules cover the requirements regarding initial and annual notices of privacy policies, the procedures that credit unions must use when providing consumers with the right to "opt out" of certain information disclosures, and the exceptions to the obligation to provide these opt out rights. The Right to Financial Privacy Act of 1978 ("Act") protects the personal financial privacy of customers of financial institutions and members of credit unions by restricting federal government access to their financial records. The Act specifies procedures for federal government authorities who seek information about a member's financial records at a credit union. It also imposes limits and duties on credit unions prior to their release of information sought by federal government agencies. TRAINING TIPS

Part 748 of the NCUA Rules and Regulations requires each federally insured credit union to develop a comprehensive written security program (including administrative, technical, and physical safeguards appropriate to their size, complexity, and the nature and scope of their operations) within 90 days of the date it is insured by the National Credit Union Share Insurance Fund. In addition, credit unions must train staff to implement the credit union’s information security program.

Every credit union insured by the National Credit Union Share Insurance Fund (NCUSIF) must comply with these regulations. The security program, along with associated procedures and training, will be evaluated during examinations by the NCUA or state credit union regulator (LOFI).

REFERENCES

Privacy of Consumer Financial Information (12 CFR 716)

Gramm-Leach Bliley (Public Law 106-102)

Right to Financial Privacy Act (12 USC §3401 et. seq.)

Federal Reserve Regulation S (12 CFR 219)

Appendix A to NCUA Part 748 Guidelines for Safeguarding Member Information {Appendix A - III(C)(2)}

CUNA Compliance Guide – Privacy of Consumer Financial Information (http://www.cuna.org/compliance/member/eguide/eguide_privacy.html)

http://www.cuna.org/compliance/member/eguide/eguide_privacy.html


Member Service Representative Training

REQUIRED OR RECOMMENDED Required for technical skills for all new MSRs; should be retrained annually. Recommended for personal skills for all new MSRs; should be retrained annually. BACKGROUND INFORMATION Duties of member service representatives can be categorized as either technical, following the credit union’s policy and procedures for the various job duties, or personal, the manner in which they carry out the job as it relates to the delivery directly to the member. Your member service representatives are often the first and only point of contact for many of your members so it is very important that they all receive proper training. TRAINING TIPS

Periodic training can be established by creating a training calendar.

Incorporation into the employee’s personal development plan is a good method to ensure training is received on a regular basis.

Periodic group training sessions for the credit union staff as a whole can also be effective.

Personal Member Service Training topics should include, but are not limited to, communication skills and sales & cross-selling skills.

Technical Member Service Training topics should include, but are not limited to, handling cash and negotiable instruments, checks & share drafts, balancing, detecting fraud, member accounts, and any other topics required per your policies.

REFERENCES

Your credit union’s policies, procedures and human resource manuals

Louisiana Credit Union League

CUNA Center for Professional Development


Security REQUIRED OR RECOMMENDED Required for all “affected staff” to receive “initial” and “periodic” training. BACKGROUND INFORMATION Robbery is a real and increasing threat for credit unions. It has a potential for high loss and carries with it the possibility of personal injury. Armed robbery is an inherent risk in the credit union industry. Employees and members are a credit union’s most valuable assets. Neither should have their lives put in jeopardy as a result of poor planning and inadequate security procedures. Burglary, while it usually does not carry the same risk of personal injury associated with robbery, still poses a risk of high loss as well as a potential for damage to credit union facilities, property, and records. Larceny, fraud, and more specifically, embezzlement are the most common threats to credit unions. The FBI estimates that 100 percent of all credit unions are currently experiencing or will experience some type of fraud or embezzlement. This threat ranges from employees pilfering office supplies or over claiming expenses to complicated cases of individuals (employees, members or other individual) diverting large amounts of credit union funds and assets. It also includes attempts by members and others to defraud the credit union. This includes a myriad of schemes and plots, including: forgeries, kiting operations, falsifying applications, overvaluing collateral, and wire transfer or other electronic scams. TRAINING TIPS

Provide initial and periodic training of officers and employees in their respective responsibilities of proper conduct before and after a robbery, burglary or larceny.

You should never place a new hire on the premises until they have had basic security training.

Make sure credit union policies and procedures related to security address employee training; prevention procedures; cash control procedures; ATM procedures; detection, identification, and monitoring; safety procedures; locks and key control; lighting (internal and external); loss limitation; trauma and coping; reporting and prosecution; and bond and insurance coverage.

Establish and maintain an employee code of ethics, which clearly sets forth standards and expected behavior. Management should foster a moral and ethical atmosphere. Honesty breeds honesty, and the converse is also true. Acts of larceny, fraud, or embezzlement should be handled quickly, firmly, fairly, and consistently. The credit union’s security program should address as many risk areas as are appropriate.

LCUL provides annual security training for no charge as a dues-supported service to all member credit unions. For more information, contact your member services consultant.

REFERENCES

Part 748 of the NCUA Rules and Regulations

Bank Protection Act

NCUA Letter to Credit Unions 02-CU-12


Servicemembers’ Civil Relief Act REQUIRED OR RECOMMENDED Strongly recommended that training be provided to affected personnel ensure compliance. BACKGROUND INFORMATION The Servicemembers Civil Relief Act (SCRA) restates, clarifies, and revises the Soldiers' and Sailors' Civil Relief Act of 1940 in an effort to help ease the economic and legal burdens on military personnel called to active duty status. SCRA gives protection to individuals who are on full-time active military service of the United States. Coverage under the SCRA begins when the servicemember receives his or her orders to report for active duty and generally ends with the date of termination from active duty or upon death while in active service. Some of the protections of the Act continue beyond the period of active duty for a short time. TRAINING TIPS

A credit union must establish and maintain written procedures to ensure its compliance with SCRA, including training requirements.

It must also provide a statement of applicable portions of the procedures to employees who perform tasks subject to the requirements of the SCRA.

Provide training to all employees performing duties subject to SCRA. REFERENCES

Servicemembers Civil Relief Act, rewrites the Soldiers' and Sailors' Civil Relief Act of 1940

CUNA Compliance Guide – Servicemembers Civil Relief Act (http://www.cuna.org/compliance/member/eguide/eguide_sscra.html)


http://www.cuna.org/compliance/member/eguide/eguide_sscra.html


Small Business Administration (SBA) Lending REQUIRED OR RECOMMENDED Recommended for all affected personnel. BACKGROUND INFORMATION The U.S. Small Business Administration (SBA) was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation. The SBA helps Americans start, build and grow businesses. Through an extensive network of field offices and partnerships with public and private organizations, SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam. TRAINING TIPS

Credit union staff should be trained in SBA underwriting practices. SBA has many requirements for approval of guarantees on loans. If loan applications are deficient, SBA will not approve loan guarantee and may require a new lender’s personnel to attend further SBA training.

The SBA considers the documentation of loan files to be critical. If loan documentation fails to comply with SBA standards, it can be considered a statutory violation. If a credit union fails to follow SBA procedures, the SBA may decide due diligence was not performed, as required by SBA regulations. Compliance or other regulatory violations may allow the SBA to revoke its guarantee at any time, even if the loan is already in default.

Failure to correctly complete and include each form will result in SBA determining the credit union is not “substantially in compliance” with SBA requirements during its loan review. The result may be a SBA instruction for the credit union to attend formal training through SBA, or in significant examples, a withdrawal of the SBA guarantee of the loan.

REFERENCES

Unites States Small Business Administration (http://www.sba.gov/aboutsba/index.html)

http://www.sba.gov/aboutsba/index.html


Supervisory Committee Duties and Responsibilities

REQUIRED OR RECOMMENDED Recommended for new and incumbent supervisory committee members on a regular basis. BACKGROUND INFORMATION NCUA’s Supervisory Committee Guide section 3.02 states: 3.02 Your appointment by the board reflects the board’s confidence in your integrity and in your ability to assume this position of responsibility in safeguarding the credit union’s assets and protecting the interests of the members. The board will have selected members who have the best backgrounds available and who are interested in the credit union as well as the functions of the committee. You can acquire the special knowledge and skills to do a credible job if you have a genuine interest in acquiring them. It is up to you to achieve a satisfactory level of proficiency in carrying out your responsibilities. You can accomplish this by reading, observing and actually performing the audit steps. To be a committee member, you should have accounting knowledge. For example, you probably don’t need an accounting degree to audit a credit union of small asset size offering core services only, but you almost always would need prior experience with double-entry bookkeeping. Also you need to have an understanding of auditing procedures. You must understand internal controls, be able to test controls, complete the annual audit, and verify members’ accounts to insure that proper procedures are followed in the gathering of data and evaluating results. If experience and understanding are lacking, you and the committee should seek sufficient training or the assistance of an outside professional who can perform the function in a competent manner. TRAINING TIPS

Periodic training can be established by creating a training calendar, or incorporating training into the strategic planning process or periodic meetings of the committee.

Documentation of the training conducted should be retained for board minutes

REFERENCES

NCUA Accounting Manual for Federal Credit Unions

NCUA Supervisory Committee Guide

LCUL CU Learn Supervisory Committee Handbook


Truth in Lending (Regulation Z)

REQUIRED OR RECOMMENDED Strongly recommended that training be provided to ensure compliance. BACKGROUND INFORMATION The Truth in Lending Act (TILA or Reg Z) is intended to ensure that credit terms are disclosed in a meaningful way so consumers can compare credit terms more readily and knowledgeably. Before its enactment, consumers were faced with a confusing array of credit terms and rates, which made it hard to compare loans because they were seldom presented in the same format. Now, all credit unions must use the same credit terminology and expressions of rates. TRAINING TIPS

Regular Truth in Lending training should be scheduled for several reasons; it isn't easy to remember; staff changes with promotions, hires, and departures; and Regulation Z keeps changing.

A credit union must establish and maintain procedures to ensure its compliance with the regulation, including procedures for employee training.

It must also provide a statement of applicable portions of the procedures to employees who perform tasks subject to the requirements of the regulation.

REFERENCES

Truth in Lending (Regulation Z), 12 CFR 226

Consumer Credit Cost Disclosure, 15 USC 41

CUNA Compliance Guide – Z: Truth in Lending Act (Regulation Z) (http://www.cuna.org/compliance/member/eguide/eguide_regz.html)


http://www.cuna.org/compliance/member/eguide/eguide_regz.html




Truth in Savings Act (Regulation DD)

REQUIRED OR RECOMMENDED Strongly recommended that training be provided for affected personnel to ensure compliance. BACKGROUND INFORMATION The Truth in Savings Act (TISA), implemented by Part 707 of NCUA’s Rules and Regulations, covers deposit accounts held by members at credit unions. The regulation requires that credit unions provide members with uniform disclosures about fees, interest rates, annual percentage yields (APY), and other terms of deposit accounts. The disclosures enable a member to make meaningful comparisons of deposit products among financial institutions. Accounts include share and deposit accounts such as shares, share drafts, and term share (certificate) accounts held by, or offered to, a natural person member or potential member primarily for a personal, family or household purpose. TRAINING TIPS

Regular Truth in Savings training should be scheduled for employees whose duties are affected by the requirements of the regulation.

Among other things, a credit union’s policies and procedures for implementing Part 707 should include training.

REFERENCES

12 USC 4300 - Truth in Savings Act

12 CFR 707- Truth in Savings

CUNA Compliance Guide – DD: Truth in Savings (Regulation DD) (http://www.cuna.org/compliance/member/eguide/eguide_tis.html)


http://www.cuna.org/compliance/member/eguide/eguide_tis.html


Other Considerations

AGRICULTURAL LENDING Training requirements regarding Agricultural Lending Controls should be established for loan officers. CHILDREN’S ONLINE PRIVACY PROTECTION ACT NCUA recommends providing training to personnel whose duties are affected by the requirements of the regulation. CONSUMER LEASING (REGULATION M) NCUA recommends providing training to personnel involved in the granting and advertising of consumer leases. CREDIT BY BANK OR PERSONS OTHER THAN BROKERS OR DEALERS FOR PURCHASING OR CARRYING MARGIN STOCK (REGULATION U) NCUA recommends providing training to loan officers involved in making margin-stock-secured loans. CREDIT COMMITTEE/LENDING PROFESSIONALS Credit unions must ensure that all members of their credit committee or personnel who handle any type of loan decisions are properly trained on all relevant policies, procedures, laws, and regulations. Training should be updated frequently and presented regularly. CREDIT PRACTICES RULE NCUA recommends providing training to personnel whose duties are affected by the requirements of the regulation. ELECTRONIC FUNDS TRANSFER ACT (REGULATION E) NCUA recommends providing training to affected personnel and updating policies and procedures as necessary to reflect regulatory changes. FAIR CREDIT REPORTING ACT NCUA recommends providing training to personnel whose duties are affected by the requirements of the regulation. FLOOD INSURANCE It is also recommended that you offer training sessions for personnel on current flood insurance requirements. HOME MORTGAGE DISCLOSURE ACT (REGULACION C) NCUA recommends providing training to personnel whose duties are affected by the requirements of the regulation.


INTERNAL AUDIT The manager of the internal audit department should have a commitment to a program of continuing education and professional development, and also have adequate technical training and proficiency. MANAGEMENT OFFICIALS INTERLOCKS Credit unions must adopt policies and procedures implementing the Interlocks Act and ensure that the board is aware of all aspects of the regulation. OSHA OSHA requirements state that you must establish a training and information program for personnel who may be exposed to hazardous chemicals in their work area at the time of their initial assignment and whenever a new hazard is introduced into their work area. PRESERVATION OF CONSUMER CLAIMS AND DEFENSES Credit unions must adopt policy and comprehensive procedures for implementing the Preservation of Consumers’ Claims and Defenses rule (Holder in Due Course) and ensure that the lending department is aware of all aspects of the rule. REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X) NCUA recommends providing training to personnel involved in the origination or processing of federally related mortgage loans or whose duties are otherwise impacted by the requirements of RESPA and Regulation X. RECORD RETENTION NCUA recommends that a credit union ensure that all departments are aware of the credit union’s record retention program. REIMBURSEMENT FOR PROVIDING FINANCIAL RECORDS (REGULATION S) NCUA recommends providing training to personnel who would be responsible for responding to inquiries from government agencies. RESERVES ON TRANSACTION ACCOUNTS (REGULATION D) NCUA recommends providing training to personnel involved in the reporting of net transactions. TRAINING IN DEFICIENT AREAS AS IDENTIFIED DURING EXAM In addition to the annual training requirements for training as outlined by specific regulations, regulators will also recommend that training be done whenever there are deficiencies in a given area.


Notes

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Credit Union Training Guide - League InfoSight

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