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NAFCU’s June Economic & CU Monitor focuses on BSA examinations, SAR filings

WASHINGTON, DC (June 28, 2018) — The National Association of Federally-Insured Credit Unions (NAFCU) in its June Economic & CU Monitor discovered that almost half of survey respondents said their credit union has filed suspicious activity reports (SARs) “defensively” as they work to balance the tension of examiners judging Bank Secrecy Act (BSA) programs based on the quantity of SARs filed with the need for discretion to ensure law enforcement is receiving the highest-quality information.

The Monitor surveys credit unions each month on key industry concerns. Below are key findings from the June Monitor and survey results, with the full report attached.

Special Topic – BSA & Information Sharing

Asked if their credit union files SARs in these circumstances, 45 percent of respondents indicated they do file defensive SARs.
25 percent of respondents said their examiners have indicated that the credit union has not filed enough SARs and 22 percent of respondents said their examiners have criticized the credit union’s failure to file a particular SAR.
With respect to reporting volume, 28 percent of respondents said they would file fewer SARs if the reporting thresholds were higher.
Ninety percent of respondents said 314(b) information should be expanded to allow institutions to share information about fraud for a more unified approach to detecting and preventing illicit activity and to help mitigate growing fraud losses.

Also included in the Monitor are the results from the June Credit Union Sentiment Index, an index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden.

The Credit Union Sentiment Index (CUSI) marks its one-year anniversary in June with a slight decline versus the prior month, but a solid gain over a year ago (Chart 5). Three of the four component scores fell during the month.
The earnings component was the only one to rise during June. In general, respondents’ outlook on earnings has been trending higher. Over 95 percent of respondents indicated that earnings conditions were either “somewhat” or “very strong”.

NAFCU witness John Lewis on Tuesday testified before a House Financial Services subcommittee on de-risking and other issues related to BSA and anti-money laundering requirements. Lewis requested more regulator guidance and a safe harbor for credit unions that provide services to higher risk members if they have met certain requirements.

About NAFCU

The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to www.nafcu.org or @NAFCU on Twitter.