OIG makes 4 recommendations for improving NCUA’s BSA program

A self-initiated review of the federal credit union regulator’s Bank Secrecy Act (BSA) program produced four recommendations by the agency’s inspector general for improving parts of its examination tool, its process of reporting to Treasury’s financial crimes enforcement unit, and its BSA enforcement manual, according to a recent report.

The report, dated May 30, said the National Credit Union Administration (NCUA) was accomplishing the five specific areas its Office of Inspector General (OIG) selected for review, but it noted ways the agency could make its program better. The NCUA reportedly agreed with the OIG’s recommendations, and the report outlines steps management is taking, or has taken, to implement them.

The audit scope for the report included federal credit union BSA examinations and enforcement actions from Jan. 1, 2018, through Dec. 31, 2021, and all applicable procedures, documentation, and controls, the OIG said.

The OIG’s recommendations are that NCUA management:

  1. Update the BSA scope tasks and questions within the Modern Examination and Risk Identification Tool (MERIT) to ensure examiners complete and document all necessary steps during BSA examinations and direct examiners to use additional external guidance such as the National Supervision Policy Manual (NSPM), Examiner’s Guide, and Federal Financial Institutions Examination Council BSA/AML Manual, as needed. (Management agreed and said it implemented changes to MERIT and the National Supervision Policy Manual that addresses this recommendation this May.)
  2. Meet with the Financial Crime Enforcement Network (FinCEN), no less often than annually, to discuss the operation of the Memorandum of Understanding and to identify any issues or adjustments that may be required. Document any revised agreements and update the agency’s policies to communicate the FinCEN reporting requirements and information needed from the regions and the Office of National Examinations and Supervision. (Management agreed and indicated the NCUA will incorporate this topic into one of the meetings they customarily have each year with FinCEN.)
  3. Develop and implement an efficient process that ensures the completeness, accuracy, timeliness, and validity of information obtained from the agency’s MERIT such as establishing reports, to meet the agency’s BSA reporting objectives, including communicating information in accordance with the Memorandum of Understanding and other agreement(s) with FinCEN. (Management agreed and indicated that as of this May, the NCUA has established a new report from the information in MERIT to better meet its BSA reporting objectives.)
  4. Revise the content of the NCUA’s Enforcement Manual to include current policies, procedures, and responsibilities for the NCUA’s formal enforcement actions and ensure its content is consistent with other agency policies. Regularly review this guidance for continued relevance and effectiveness in achieving the agency’s objectives. (Management agreed and indicated the NCUA will update the relevant content currently in the Enforcement Manual and incorporate this manual into the NSPM by Dec. 31, 2025; and will ensure this content is consistent with the NCUA’s other related policies.)

Audit of the NCUA’s Bank Secrecy Act Enforcement Program (Report #OIG-24-06)