2022 Exam Focus

DCU Bulletin B-22-02

2022 Exam Focus

The Washington State Department of Financial Institutions, Division of Credit Unions, released B-22-02 Initiatives and Exam Focus for 2022. The Bulletin describes the DCU’s current initiatives and what examiners will be looking for when conducting annual reviews of state-chartered credit unions during the year.

The DCU will use a hybrid approach to exams with some examiners working remotely and some working onsite at the credit unions. Examiners will be using the MERIT Exam Software for all exams.

As in previous years, examiners will focus on consumer compliance and information security and technology. Safety and Soundness Consumer Compliance Exams will focus on BSA, third-party relationships, FDPA, loss mitigation and foreclosure procedures, FCRA, and Regulation E. Stand-alone exams will include CMS and third-party due diligence, mortgage servicing and error resolution, loss mitigation policies, fair lending, Regulation E, UDAAP, and other areas as identified in the risk-based scoping. Overdraft procedures and NSF fees are called out in both the stand-alone and Safety and Soundness Regulation E exams.

Examiners encourage credit unions to complete the FFIEC Cybersecurity Self-Assessment Tool, the NCUA Automated Cybersecurity Assessment Tool, or a similar type of tool to help credit unions assess cybersecurity preparedness. Examiners will also review third-party risk management – especially third-parties that have access to PII.

Examiners will be focusing on declining net worth ratios. Examiners will be looking at credit unions’ strategic planning, business planning, and budgeting to address the increased deposits during the pandemic.

Additionally, credit risk will be included in the examinations. Examiners will be evaluating underwriting standards, credit risk-management, concentration, commercial lending, and the introduction of new credit products.

If you want help to ensure that your credit union’s consumer compliance meets the requirements, contact us. Our staff of consultants and auditors are here to help. Visit our website for more information.

 

Please be advised that CSG provides financial services compliance audit and consulting services to our clients.  The services that we provide include certain tasks that may be characterized as “law-related services” under Rule 5.7 of the Rules of Professional Conduct governing lawyers.  Since some of our employees are lawyers with an active bar license but are NOT engaged in the private practice of law, that Rule requires us to make disclosures clarifying that the services we perform may be law-related services, but they are not legal services.  Because they are not legal services, those services and our relationship will not be governed by the Rules of Professional Conduct that guide the client-lawyer relationship, such as rules applicable to privileged communications and prohibitions of conflicts of interest.  Notwithstanding this disclaimer, we will continue to govern our relationship with you using reasonable ethical and professional standards that are expected to meet your expectations.

 

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