United States

NCUA approach in reviewing CDD and beneficial ownership


On Aug. 17, 2018, the National Credit Union Association (NCUA) issued Supervisory Letter No. 18-01 to provide field staff with guidance regarding expectations and implementation of examination procedures to review compliance with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) issued final rules regarding customer due diligence (CDD) requirements for financial institutions. The Supervisory Letter applies to all federally insured credit unions (FICUs) and states that CDD and beneficial ownership requirements are now a required minimum component of a credit union’s BSA/AML internal controls. To assist credit unions with the new requirements, the NCUA has updated the BSA questionnaire that will become effective in September 2018 once it is added to the Automated Integrated Regulatory Examination System (AIRES)  exam software. Throughout the remainder of 2018, NCUA field staff will not take exception to a credit union’s noncompliance as long as a good faith effort to comply with the new rules can be shown. However, in 2019, NCUA field staff is expected to begin more in-depth reviews of policies, procedures and processes in order to establish compliance with the regulatory requirements of CDD and the credit union’s ability to identify and verify beneficial owner(s) of legal entity members.

What does this mean for you?

Credit unions should review the BSA questionnaire attached to Supervisory Letter No. 18-01 to preview the new CDD and beneficial ownership questions that will be posed by examiners. It is expected that the new BSA questionnaire will be uploaded to AIRES with the September 2018 release. Once added, field staff are expected to discuss and determine a credit union’s awareness of the new requirements and its compliance with those requirements.