Table of Contents. Chapter 1...1

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1 Table of Contents Chapter The Compliance Officer...1 Overview...2 The Compliance Officer...2 What is Compliance Risk?...3 NCUA s Defined Risk Categories... 3 Skills of a Compliance Officer...6 Identifying Risk...8 External Sources of Compliance Risk...9 Laws... 9 Federal Credit Union Act Regulations Guidance Enforcement Actions Lawsuits State and Local Issues Internal Sources of Compliance Risk...14 Contracts, Disclosures, Advertisements, Bylaws and Policies Reputation Conclusion Measuring Risk...16 NCUA Examinations...17 Conclusion Controlling Risk...19 Typical Structures for Compliance Programs...20 Centralized Programs Decentralized Programs Hybrid Options Use of Outside Counsel and Consultants Complaint Management Programs...23 Increasing Regulator Focus vii

2 A Comprehensive Complaint Management Process Benefits of a Comprehensive Complaint Management Process NCUA Complaint Process...27 Attempted Resolution by the Credit Union Investigation by the Consumer Assistance Center Appeals of the Consumer Assistance Center Determination Conclusion Monitoring Risk...29 External and Internal Audits...30 Audits and the Supervisory Committee...30 Working with External Auditors...31 Internal Audit Functions...33 Audits and the Bank Secrecy Act...35 IT Audits...36 Conclusion Organizational-Wide Compliance...37 Enterprise Risk Management...37 Risk Management Systems for Natural Person Credit Unions Formal Enterprise Risk Management Frameworks Eight Core Enterprise Risk Management Components NCUA Examinations of Enterprise Risk Management Processes Conclusion Culture of Compliance Regulator Expectations Relationship Between Compliance Risk and Compliance Culture Defining a Culture of Compliance Strengthening a Culture of Compliance...45 Leadership, a Top-Down Approach Open Communication Incentives Provide Adequate Resources and Training Testing Conclusion Attachment Case Studies on Compliance Deficiencies...60 Chapter Conducting Research...57 Overview...58 Research is a Skill...58 Every Individual has a Different Approach...58 viii

3 Off the Grid...59 Research Resources and Tips...60 Importance of Citations and Source Documents...60 Setting Up Subscriptions to Receive Updates...61 Scope Framing the Question...61 Making the Most of Google (and Other Search Engines)...62 Basic Search Engine Functions Exact Phrase Using Quotation Marks Searching Multiple Terms or Phrases Using AND Searching Alternative Terms Using OR Excluding Terms Using Google s Advanced Search Tools Limit by Time frame ecfr Locating Regulatory Text...73 Chapter VII NCUA Regulations Chapter X Various CFPB Regulations Chapter II Federal Reserve Regulations Other Miscellaneous Titles Staff Commentary, Model Forms and Other Appendices The Federal Register Guidance in Rulemaking Preambles...76 Searching Within Documents or Web Pages...78 Using NCUA s Website...79 Internal Policies and Similar Resources...79 Organizational Tips...80 Organizing Research Materials...80 Paper Versus Electronic Resources...80 Utilize Archived Compliance Information...80 Working in the Cloud...81 Download Important PDFs and Documents to Desktop...81 Attachment Research Charts...82 Chapter How to Write Effectively Overview Common Types of Writing I.R.A.C. Writing Method Issue ix

4 Frame the Issue The Issue May Evolve Rules Analysis/Application Conclusion Other Considerations Write to the Audience Keep the Legalese to a Minimum Brevity Manage Expectations Let it Cool and Review With Fresh Eyes Explaining to a Lay Audience Conclusion Chapter Writing Policies and Procedures Overview Corporate Governance Why Are Policies and Procedures Created? Regulatory Requirements Risk Mitigation Consistency and Efficiency Regulators and Policies and Procedures NCUA Expectations Examiner s Guide The Office of the Comptroller of the Currency Consumer Financial Protection Bureau Expectations Using Regulations and Guidance Documents Board-Approved Policies Required Policies Major Policies General Tips Chapter Working with Outside Counsel Why Do Credit Unions Use Outside Counsel? Considerations Before Hiring Outside Counsel x

5 Selecting Outside Counsel Considerations After Hiring Outside Counsel Additional Considerations Conclusion Final Thoughts Appendix A Key NCUA Legal Opinion Letters Appendix B Key NCUA Letters to Credit Unions and Letters to Federal Credit Unions xi