Last month at the Regulatory Compliance Certification School, Colleen Kelly, Partner and General Counsel, began her presentation with a reminder that compliance jobs are fast and furious. They don’t have the luxury to sit back and wait. Not when their credit union’s safety and compliance is on the line.
After a review of compliance requirements on Anti-Money Laundering Act, the Corporate Transparency Act of 2020, and the Beneficial Owner Information (BOI) Access Rule requirements, Kelly dove into three trends facing the compliance landscape: classic trends, evergreen trends and contemporary trends.
Classic trends: privacy
There are some trends facing the compliance landscape that will never go away. Ones that may feel like we have our arms wrapped around them because they are always around, and yet we need to stay on top of them.
The most obvious classic: privacy. It will continue to be an important conversation and with new angles factored in every year. This holds true with the introduction of AI but also when it comes to state and federal privacy bills impacting credit unions.
Historically, privacy has been a state issue. Before 2019, only 5 states had passed comprehensive privacy bills. Last year, 8 more states followed suit, and even more are expected this year. Some of the main concerns these bills are working to address might include opt-in or opt-out, the right against automated decision-making, and the right to access data.
It is critical for compliance professionals to be aware of what is happening with these state bills because of the potential impacts on their credit union.
One recommendation is to confirm you are following the Gramm-Leach-Bliley Act.
Evergreen trends: scams and frauds
There are also trends that are constant. Trends like scams and fraud.
The most reported type of fraud are imposter scams. These imposters could be contacting your members and saying they are calling from your credit card fraud department.
The Federal Trade Commission reported that $10 billion dollars were lost to scams in 2023, an increase of $1 billion dollars from 2022.
Federal Trade Commission reported that $10 billion dollars were lost to scams in 2023.
Scams that started over social media accounted for the highest total losses while scams that started with phone calls had the largest loss per person. One of the most targeted groups of people are older adults.
It’s important to talk to your membership and your staff about this. Some recommendations from Kelly included:
- Encourage older members to provide you with a trusted contact
- Consider asking for more than one trusted contact
- Educate your staff on identifying suspicious activity (ex: large amount of gift card purchases)
Check out the latest Financial Trend Analysis from the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) that shares Bank Secrecy Act (BSA) data around Elder Financial Exploitation.
Contemporary trends: cryptocurrencies
The final category of trends is those that go up and down but stay current. Cryptocurrency continues to be a trend we see as a potential disruptor for traditional banking services.
The significant risk comes from the way they work outside of traditional banking services. There is limited to no protection or safeguards with new players entering this digital financial space every day.
Three things to be mindful of when it comes to cryptocurrency:
- Remittances: the ability for cryptocurrency to move money from one spot to the other quickly and without all the extras fees is giving them a foothold.
- 3rd party vendors: NCUA put out a letter in 2021 that they don’t prohibit federally insured credit unions from partnering with 3rd party vendors.
- Custodial services: when push comes to shove, people may turn back to the traditional financial services they trust.
Like any trend or risk, credit unions should understand the controls they need to put in place to minimize risk. Continue your awareness and understanding of compliance trends and managing risk at our upcoming events: Risk Management Seminar on August 13-15, and Compliance and Risk Council Conference on September 24 – 26.
*This information is intended only as a summary and is not legal advice.