Civil Money Penalties and NCUA

Credit Union Regulatory Guidance Including: NCUA, CFPB, FDIC, OCC, FFIEC

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Hello, this is Samantha Shares. This episode covers N C U A’s Authority to Assess Civil Money Penalties as outlined in its Enforcement Manual.

The following is an audio version of manual. This podcast is educational and is not legal advice. We are sponsored by Credit Union Exam Solutions Incorporated, whose team has over two hundred and Forty years of National Credit Union Administration experience. We assist our clients with N C U A so they save time and money. If you are worried about a recent, upcoming or in process N C U A examination, reach out to learn how they can assist at Mark Treichel DOT COM. Also check out our other podcast called With Flying Colors where we provide tips on how to achieve success with N C U A.

And now civil money penalties.

1. What are civil money penalties?

The FCU Act section206(k), 12 U.S.C. section1786(k), contains N.C.U.A.'s authority to issue civil money penalties; N.C.U.A. Rules and Regulations. Section 747, Subpart A, contains the rules and regulations governing civil money penalty administrative hearings. The N.C.U.A.

Board may assess civil money penalties against either a credit union or an institution­ affiliated party (see definition of institution-affiliated party above). The FCU Act specifies three tiers of civil money penalties, as follows:

► First tier. Any credit union or institution-affiliated party that violates a law or regulation, a final order of the N.C.U.A. Board, a published agreement with the Board (such as a published Letter of Understanding and Agreement), or a condition imposed in a published writing by the Board in connection with the granting of any application (such as the Insurance Agreement), may receive a penalty of not more than 5,000 dollars for each day of the violation. First tier penalties may apply to credit unions that, even after warnings, repeatedly submit late or substantially inaccurate call reports.

► Second tier. If the credit union or institution-affiliated party commits a first tier violation, and exhibits reckless conduct or a breach of fiduciary duty, and the violation, practice or breach is part of a pattern of misconduct, or causes more than a minimal loss to the credit union, or results in a monetary gain or other benefit to the institution-affiliated party, then the N.C.U.A. Board may assess a civil money penalty of not more than 25,000 dollars per day for each day of the violation.

► Third tier. Any credit union or institution-affiliated party that knowingly commits the first tier violations, knowingly engages in unsafe or unsound practices, knowingly breaches any fiduciary duty, or knowingly or recklessly causes a substantial loss to the credit union or a substantial monetary gain or other benefit to a party because of the violation, breach, or practice, may receive assessment of a civil money penalty of not more than $1,000,000 per

day for each day of the violation, or in the case of a credit union, 1 percent of assets, whichever is less.

2. How are civil money penalties assessed?

The normal administrative procedure for a civil money penalty action is as follows:

1. The regional director notifies the party of his or her intent to recommend to the N.C.U.A. Board the issuance of a civil money penalty, requesting a written response from the party.

2. The N.C.U.A. Board issues a Notice of Assessment, setting forth a statement of the law and facts on which it bases the assessment.

3. The assessed party has 90 days to make payment, but may request a hearing within 20 days.

4. An administrative law judge will hold a formal hearing if requested.

5. After the administrative hearing, the administrative law judge submits a recommended decision to the N.C.U.A. Board.

6. The N.C.U.A. Board issues its final order.

7. An institution-affiliated party or credit union may appeal to the U.S. Court of Appeals within 20 days of receipt of the final order.

This concludes the N.C.U.A. civil money penalty authorities and policies.

If your Credit union could use assistance with your exam, reach out to Mark Treichel on LinkedIn, or at mark Treichel dot com. This is Samantha Shares and we Thank you for listening.

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