Washington State CUs Face New Compliance Exams
Washington state credit unions with more than $500 million in assets are now required to complete consumer compliance exams in a state-mandated bid to improve consumer financial service, according to a bulletin issued by the Washington State Department of Financial Institutions’ Division of Credit Unions.
Exams for the new rule, effective Sept. 11, will be focused solely on consumer and regulatory compliance and conducted at a different time than the annual safety and soundness checks to which a credit union is subjected, the bulletin said. The credit union examined under this procedure will receive a compliance rating separate from its other scores.
The Washington State DFI will complete its ratings over a 20-month period and focus solely on credit unions with more than $500 million in assets, the department said.
The 10-month cycle will be ongoing for future exams. Credit unions with assets less than $500 million will be rated on consumer compliance issues as part of their regular safety and soundness exams, the bulletin said.
Credit unions subject to the separate consumer compliance exam will be given eight-week’s notice to have the appropriate documents ready for examination. The examination scope will cover operational functional areas such as deposits, consumer lending, mortgage lending, mortgage servicing, privacy and consumer information, and cover compliance with regs selected from a list of as many as 24 different federal and state statutes.
The list includes laws such as the Bank Secrecy Act, Truth in Lending and Unlawful Internet Gambling Enforcement Act to which the credit union may be subject to examination, the bulletin said.
Significant concerns found during the consumer compliance examination will be followed up by examiners during safety and soundness exams or a special limited scope compliance exam. The DFI is currently developing a compliance examination manual, which will describe the scope, objectives, and examination procedures for the separate compliance exam.
The Division of Credit Unions adopted the Federal Financial Institutions Examination Council’s Uniform Consumer Compliance Rating System for its compliance exams.
Under this rating system, a credit union is assigned a confidential compliance rating based upon an evaluation of its present compliance with the applicable consumer protection laws and the adequacy of its systems designed to ensure compliance with these laws on a continuing basis, the division said.