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Cornerstone Responds to FinCEN Proposal on Customer Due Diligence
Tuesday, October 7, 2014 6:55 AM

Suzanne Yashewski, SVP Regulatory and Compliance, recently wrote to the Financial Crimes Enforcement Network, Department of the Treasury, to comment on the Customer Due Diligence Requirements proposal which would amend the Bank Secrecy Act regulations.

In her letter, Yashewski said that Cornerstone and its member credit unions support efforts to battle money laundering and terrorism; however, the regulatory burdens of the new proposal greatly outweigh its purported benefits.

"We oppose the aspect of the proposal seeking to expand the requirements related to the 'beneficial ownership' of legal entities," Yashewski said. "Verifying the identity of customers under the current customer identification program, or CIP process, is manageable under the risk based approach; however, verification of the status of beneficial owners would be nearly impossible for credit union staff."

Regarding regulatory burdens, Yashewski said, "Financial institutions are completely inundated with regulatory burdens put in place by a multitude of regulators. All proposed new regulatory burdens must be considered in the context of the full body of regulatory burdens imposed on financial institutions."

Yashewski also addressed exemptions and delaying the effective date by 18-24 months from the issuance date proposed to allow for the placement of additional staffing and training resources, as well as other compliance, software, and system changes.

"We urge FinCEN to focus on potential legislative changes to require the collection of beneficial ownership information at the time that legal entities are formed, rather than placing additional regulatory burdens on financial institutions," Yashewski said.

To read the entire comment letter, you can go to Cornerstone's website. If you have any questions, please contact Suzanne Yashewski at syashewski@cornerstoneleague.coop or (512) 853-8516.

___________________________________

And don't forget . . .

The next comments due to regulatory agencies in October will be in response to the following two proposals:

NCUA:  Fixed Assets

  • The proposal would remove the waiver requirement for federal credit unions to exceed the 5% aggregate limit on investment in fixed assets.
  • The proposal would allow credit unions to exceed the 5% limit if it implements a fixed-assets management program.
  • Comments are due to NCUA by Oct. 10.

CFPB:  Home Mortgage Disclosure Act (HMDA) Regulation C

  • The proposal would revise tests for determining which institutions are covered under the HMDA. Covered entities, including credit unions that trigger Regulation C compliance, would be required to report HMDA data if they originate 25 covered loans other than open-end lines of credit and commercial lines of credit, in the previous calendar year.
  • Comments are due to CFPB by Oct. 29.

Please refer to Cornerstone's Regulatory Grid Summary or CUNA's Comment Calls page for more details about these proposals.

If you have questions, please contact Suzanne Yashewski, SVP Regulatory Compliance, at (512) 853-8516.