The NAFCU Journal May - June 2018 - 53

Upcoming Compliance Deadlines
May 11, 2018

FinCEN's final rule on customer due diligence requires credit unions to identify and verify
the beneficial owner(s) of legal entity accounts, subject to certain exceptions. Previously, a
credit union was only required to know the identity of each of its legal entity customers, but
not necessarily its beneficial, natural person owners. Beneficial owners include each natural
person who directly or indirectly has a 25 percent or more equity interest in the legal entity
customer, as well as single individuals who have "significant responsibility to control, manage
or direct a legal entity customer," such as a CEO, COO or CFO.

July 1, 2018

The Federal Reserve Board issued a final rule to amend subparts A, C, D and the official
staff commentary to Regulation CC. The final rule modifies the current check collection and
return requirements to reflect today's virtually all-electronic check collection and return
environment. It encourages all depository banks to receive, and paying banks to send,
returned checks electronically.

Oct. 18, 2018

On July 7, 2017, the CFPB finalized amendments to its Truth in Lending Act (TILA) and Real
Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) rule. It codifies the
bureau's previously issued informal guidance on the rule and provides additional technical
clarifications. In addition, it makes adjustments to substantive issues in the rule, including but
not limited to: 1) making tolerance provisions for the total of payments that parallel existing
tolerances for the finance charge and disclosures affected by the finance charge; 2) clarifying
that recording fees and transfer taxes may be charged in connection with housing assistance
lending transactions without losing eligibility for the existing partial exemption; 3) extending
the rule's coverage to include all cooperative units rather than just transactions secured by
real property; and 4) clarifying how a creditor may provide separate disclosure forms to the
consumer and the seller.

Download the latest NAFCU Compliance Calendar at www.nafcu.org/compliancecalendar.

"retroactiveness" of the interpretive rule
is an issue that will likely have to be
resolved in court.
After the second interpretative rule was
issued, many credit unions audited their
vehicle loan portfolios and discovered
that they had several indirect vehicle loans made to covered borrowers
in which GAP insurance had been
financed but MLA disclosures were not
provided. Additionally, in many of these
cases, the cost of GAP insurance also
caused the loan to exceed the permitted
36 percent MAPR. Unfortunately, the
rule does not have a provision for fixing
errors after the closed-end loan is in
the book. Instead, the rule provides for
harsh penalties and remedies, including
potential civil liability and the voidance
of the loan contract.
THE NAFCU JOURNAL  MAY-JUNE 2018

In effect, the second interpretative rule
has caused operational and compliance
nightmares for credit unions' indirect
lending relationships. For example,
credit unions are wondering whether
they should be requiring dealers to
conduct a covered borrower search
and providing MLA disclosures to
covered borrowers seeking to finance
GAP insurance or other credit insurance premiums. Credit unions are also
considering whether they should ask
dealers to stop offering GAP insurance
to covered borrowers and whether they
should audit indirect vehicle loans before
they close. According to some credit
unions, the additional audit step would
create a delay in the loan closing and
potentially affect the covered borrower's ability to obtain GAP insurance, as
dealers may stop offering this product

to covered borrowers. Both of these
results are unintended consequences of
the MLA rule that will continue to affect
credit unions and dealers until the DoD
resolves this issue.
NAFCU is in constant contact with the
DoD and has formally petitioned the
department to rescind the guidance that
created this mess in the first place. Until
the DoD decides on the proper way to
fix this issue, credit unions finding noncompliant loans in their portfolios may
want to contact competent counsel to
create a plan of action on how to move
forward with these loans. Learn more at
www.nafcu.org/mla.
Stephanie Lyon is NAFCU regulatory
compliance counsel.
53


http://www.nafcu.org/compliancecalendar http://www.nafcu.org/mla

Table of Contents for the Digital Edition of The NAFCU Journal May - June 2018

Conferences
From the Chair
Washington and Industry Briefs
Trump, Credit Union CEOs Discuss Issues at White House
Growth Strategies
In Cybersecurity We Trust?
The New Landscape of Mobile Banking
2018 Annual Conference Exhibitor Directory
Executive Spotlight
Management Insight
Compliance Central
Inside NAFCU Services
The NAFCU Journal May - June 2018 - Cover1
The NAFCU Journal May - June 2018 - Cover2
The NAFCU Journal May - June 2018 - 1
The NAFCU Journal May - June 2018 - 2
The NAFCU Journal May - June 2018 - Conferences
The NAFCU Journal May - June 2018 - From the Chair
The NAFCU Journal May - June 2018 - 5
The NAFCU Journal May - June 2018 - Washington and Industry Briefs
The NAFCU Journal May - June 2018 - 7
The NAFCU Journal May - June 2018 - 8
The NAFCU Journal May - June 2018 - 9
The NAFCU Journal May - June 2018 - Trump, Credit Union CEOs Discuss Issues at White House
The NAFCU Journal May - June 2018 - 11
The NAFCU Journal May - June 2018 - 12
The NAFCU Journal May - June 2018 - 13
The NAFCU Journal May - June 2018 - 14
The NAFCU Journal May - June 2018 - 15
The NAFCU Journal May - June 2018 - Growth Strategies
The NAFCU Journal May - June 2018 - 17
The NAFCU Journal May - June 2018 - In Cybersecurity We Trust?
The NAFCU Journal May - June 2018 - 19
The NAFCU Journal May - June 2018 - 20
The NAFCU Journal May - June 2018 - 21
The NAFCU Journal May - June 2018 - 22
The NAFCU Journal May - June 2018 - 23
The NAFCU Journal May - June 2018 - The New Landscape of Mobile Banking
The NAFCU Journal May - June 2018 - 25
The NAFCU Journal May - June 2018 - 26
The NAFCU Journal May - June 2018 - 27
The NAFCU Journal May - June 2018 - 28
The NAFCU Journal May - June 2018 - 29
The NAFCU Journal May - June 2018 - 30
The NAFCU Journal May - June 2018 - 2018 Annual Conference Exhibitor Directory
The NAFCU Journal May - June 2018 - 32
The NAFCU Journal May - June 2018 - 33
The NAFCU Journal May - June 2018 - 34
The NAFCU Journal May - June 2018 - 35
The NAFCU Journal May - June 2018 - 36
The NAFCU Journal May - June 2018 - 37
The NAFCU Journal May - June 2018 - 38
The NAFCU Journal May - June 2018 - 39
The NAFCU Journal May - June 2018 - 40
The NAFCU Journal May - June 2018 - 41
The NAFCU Journal May - June 2018 - 42
The NAFCU Journal May - June 2018 - 43
The NAFCU Journal May - June 2018 - 44
The NAFCU Journal May - June 2018 - 45
The NAFCU Journal May - June 2018 - 46
The NAFCU Journal May - June 2018 - 47
The NAFCU Journal May - June 2018 - Executive Spotlight
The NAFCU Journal May - June 2018 - 49
The NAFCU Journal May - June 2018 - Management Insight
The NAFCU Journal May - June 2018 - 51
The NAFCU Journal May - June 2018 - Compliance Central
The NAFCU Journal May - June 2018 - 53
The NAFCU Journal May - June 2018 - Inside NAFCU Services
The NAFCU Journal May - June 2018 - 55
The NAFCU Journal May - June 2018 - 56
The NAFCU Journal May - June 2018 - Cover3
The NAFCU Journal May - June 2018 - Cover4
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