NAFCU Sends Letters To Congress On Flood Insurance, BSA

ARLINGTON, Va.—NAFCU has sent letters to Congress addressing the National Flood Insurance Program (NFIP) and the Bank Secrecy Act (BSA).

NAFCU

Ahead of the House Financial Services Committee hearing on reauthorizing the NFIP, NAFCU’s Brad Thaler reiterated the association's call for a multi-year reauthorization of the program and offered support for a number of provisions included in draft legislation from Committee Chairwoman Maxine Waters (D-CA).

"NAFCU supports a long-term reauthorization of the NFIP," wrote Thaler, NAFCU's vice president of legislative affairs. "The recent reauthorizations of the NFIP that have amounted to only short-term extensions, with brief program lapses, have created a high level of uncertainty for the millions of families who rely on flood insurance policies.

"This market uncertainty puts a damper on the lending volume of our nation's credit unions and the economic activity of their members," he added.

What Group Supports

Waters' discussion draft of bipartisan legislation proposes some reforms aimed at making flood insurance more affordable and would provide reauthorization for five years. Within the draft, Thaler said NAFCU is supportive of:

  • Addressing the affordability of flood insurance
  • Raising the coverage limits
  • Providing funds for improved mapping technology
  • Mitigating fraud and abuse within the claims system
  • Taking steps to continue the financial solvency of the program to maintain market stability

NAFCU noted it has previously pushed for a number of these improvements to the NFIP. Thaler also cautioned against legislation that would increase annual premium rates too quickly.

In addition, five federal agencies – including the NCUA – recently finalized an interagency rule that requires mortgage lenders to accept both private and government-backed flood insurance policies.

No Secret—It’s a Burden

Separately, Thaler also sent a letter to the House Financial Services Committee offering support in improving the Bank Secrecy Act (BSA)/anti-money laundering (AML) regime, saying it presents a significant compliance burden on credit unions.

Thaler, NAFCU's vice president of legislative affairs, sent a letter ahead of a hearing this week with the House Financial Services Subcommittee on National Security, International Development and Monetary Policy focused on legislative proposals to detect and deter financial crime.

The subcommittee is set to consider three proposals, one of which is offered by Committee Chairwoman Maxine Waters (D-CA) that would make changes to AML safeguards. Committee Member Carolyn Maloney (D-NY) offered another one to require corporations to disclose more information about their owners.

Hard to Implement

As credit unions work to combat criminal activity in the financial system, Thaler said that many BSA/AML requirements are hard to implement.

"Our members have consistently reported a lack of consistency among examiners in reviewing BSA policies and procedures, which makes it difficult to accurately anticipate how extensively to prepare for an exam," Thaler wrote. "Additionally, many of our members have indicated that prudential examiners are too heavily focused on auditing absolute numbers of Suspicious Activity Report (SAR) filings and absolute compliance."

Within the draft legislation, Thaler offered support for:

  • A focus on training for examiners on countering the financing of terrorism (CFT) and AML issues, as it will improve credit unions' exams
  • Efforts to modernize the AML system, including encouraging innovation and allowing the testing of new technologies and innovations
  • Increasing information sharing and allowing the sharing of compliance resources among financial institutions

Additional Suggestions

Thaler also provided additional ways to expand and improve the proposals for the subcommittee to consider:

  • Raising the threshold for SAR and Currency Transaction Report (CTR) filings in order to reduce credit unions' burden and ensure FinCEN can accurately assess filings
  • Providing technical grants or training through FinCEN to help reduce costs and man-hours required for compliance
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