The NAFCU Journal January-February 2020 - 22

became state law. This year, absent
federal action, it is expected that a stateby-state patchwork of cybersecurity
and privacy laws will continue to form,
creating uncertainty and regulatory
complexity for credit unions.
Q: What do you think will be the main
compliance challenge for credit unions?
To a certain extent, a credit union's
operations will have an impact on what
its main compliance challenge will be, but
there are a few things for credit unions to
look out for this year besides data security
trends. We expect the NCUA to conduct
more fair-lending exams in 2020, and the
agency is likely to take a harder look at
HMDA compliance. The NCUA also continues its exam modernization initiatives,
working to replace the current AIRES
questionnaires with its new Modern
Exam Risk Identification Tool, or MERIT.
If there were to be an economic downturn
this year, collections compliance issues
might present challenges for credit unions,
as some things may occur more often
than we see in the current environment
- like loss mitigation rules for mortgage
servicing. Finally, the trend of litigation
against credit unions may continue, perhaps with overdraft lawsuits, or with Fair
Credit Reporting Act or Telephone Consumer Protection Act claims, especially
if delinquency rates pick up, as that kind
of litigation is sometimes seen alongside
debt collection efforts.
Q: What compliance trends are you
seeing in regard to BSA?
We continue to hear mixed reports from
credit unions in terms of NCUA examinations for BSA compliance. It seems
examiners have varied levels of knowledge or comfort with the BSA and in
some cases are heavy-handed in questioning reasonable risk-based decisions
in this area. We have also seen support
in Congress for some BSA/AML reform,
so if that gains additional traction in
2020, there could be some regulatory
relief here as well as congressional review
of BSA examinations. The Financial
Crimes Enforcement Network (FinCEN)
continues work on quantifying the value
22

of information received in suspicious
activity reports. Credit unions may also
see FinCEN release guidance on hemp
banking now that the U.S. Department
of Agriculture has released its interim
final rule for the industry.

Economic Outlook
and Fintech

Curt Long, NAFCU's
vice president of
research and chief
economist
Q: There have been a number of rate
cuts amid recession fears. Do you foresee
the Federal Open Market Committee
(FOMC) taking further easing measures
in 2020? How can credit unions prepare?
What the FOMC wants to do and
what it is likely to do are two different
things. The committee clearly wants
firmer economic data (especially
inflation) and a reduction to downside
risks, allowing for future rate hikes.
This would add some badly needed
ammunition to its arsenal in case of a
recession. But the committee has an
easing bias right now, and for good
reason. Economic risks are highlighted
by the trade war and slow business
abroad. A more structural issue is weak
inflation, which has gone on for so
long that it is starting to impact expectations. This is a critical issue for the
committee, as lower inflation expectations will make it much harder to reach
its target for price growth, which has
already proven exceedingly difficult to
achieve. Credit union strategies should

be robust to a variety of outcomes, but
the most likely scenario is for further
rate cuts in 2020. If that bears out,
credit unions that are able to lock in
yields now will fare best.
Q: The competitive dynamic of financial
technology continues to be a hot topic,
with regulatory agencies issuing policies
meant to promote innovation and ensure
credit unions are able to keep up. How
would regulatory coordination lead to an
even playing field for credit unions and
fintech companies?
Regulating financial technology is a
challenge. The field is dynamic, and
the term itself is nebulous. Without a
coordinated effort, the approach will
either be insufficient or uneven (or
both). Given the amount of capital
pouring into fintech, any hole in the
regulatory approach is likely to be
exploited by existing fintech firms or
startups. That has potentially grave
consequences for consumers and
depository institutions alike. It is
for this reason that NAFCU released
a white paper last year, Regulatory
Approaches to Financial Technology, which provides a framework for
regulators to address the challenges of
fintech in a more structured and transparent fashion. This will allow credit
unions to take advantage of technology
to better serve their members, while
providing adequate consumer protections and allowing for a level regulatory playing field.
Rouky Diallo is NAFCU's associate director
of communications.

THE NAFCU JOURNAL  JANUARY-FEBRUARY 2020



The NAFCU Journal January-February 2020

Table of Contents for the Digital Edition of The NAFCU Journal January-February 2020

The NAFCU Journal January-February 2020
Contents
Conferences
From the Chair
2020 Advocacy Priorities
The Bottom Line
Leadership Download
Warning: Speed Bumps Ahead
Stepping Into 2020
2020 Vendor Directory
Executive Spotlight
Management Insight
Compliance Central
Inside NAFCU Services
From the President’s Desk
The NAFCU Journal January-February 2020 - The NAFCU Journal January-February 2020
The NAFCU Journal January-February 2020 - Cover2
The NAFCU Journal January-February 2020 - Contents
The NAFCU Journal January-February 2020 - 2
The NAFCU Journal January-February 2020 - Conferences
The NAFCU Journal January-February 2020 - From the Chair
The NAFCU Journal January-February 2020 - 5
The NAFCU Journal January-February 2020 - 2020 Advocacy Priorities
The NAFCU Journal January-February 2020 - 7
The NAFCU Journal January-February 2020 - The Bottom Line
The NAFCU Journal January-February 2020 - 9
The NAFCU Journal January-February 2020 - Leadership Download
The NAFCU Journal January-February 2020 - 11
The NAFCU Journal January-February 2020 - Warning: Speed Bumps Ahead
The NAFCU Journal January-February 2020 - 13
The NAFCU Journal January-February 2020 - 14
The NAFCU Journal January-February 2020 - 15
The NAFCU Journal January-February 2020 - 16
The NAFCU Journal January-February 2020 - 17
The NAFCU Journal January-February 2020 - Stepping Into 2020
The NAFCU Journal January-February 2020 - 19
The NAFCU Journal January-February 2020 - 20
The NAFCU Journal January-February 2020 - 21
The NAFCU Journal January-February 2020 - 22
The NAFCU Journal January-February 2020 - 2020 Vendor Directory
The NAFCU Journal January-February 2020 - 24
The NAFCU Journal January-February 2020 - 25
The NAFCU Journal January-February 2020 - 26
The NAFCU Journal January-February 2020 - 27
The NAFCU Journal January-February 2020 - 28
The NAFCU Journal January-February 2020 - 29
The NAFCU Journal January-February 2020 - 30
The NAFCU Journal January-February 2020 - 31
The NAFCU Journal January-February 2020 - 32
The NAFCU Journal January-February 2020 - 33
The NAFCU Journal January-February 2020 - Executive Spotlight
The NAFCU Journal January-February 2020 - Management Insight
The NAFCU Journal January-February 2020 - Compliance Central
The NAFCU Journal January-February 2020 - 37
The NAFCU Journal January-February 2020 - Inside NAFCU Services
The NAFCU Journal January-February 2020 - 39
The NAFCU Journal January-February 2020 - From the President’s Desk
The NAFCU Journal January-February 2020 - Cover3
The NAFCU Journal January-February 2020 - Cover4
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