[Federal Register Volume 70, Number 23 (Friday, February 4, 2005)]
[Proposed Rules]
[Pages 5946-5948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2205]


=======================================================================
-----------------------------------------------------------------------

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chap. VII


Request for Burden Reduction Recommendation; Safety and Soundness 
and Anti-Money Laundering Regulations; Economic Growth and Regulatory 
Paperwork Reduction Act of 1996 Review

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of regulatory review; request for comments.

-----------------------------------------------------------------------

SUMMARY: The NCUA Board is continuing its review of its regulations to 
identify outdated, unnecessary, or unduly burdensome regulatory 
requirements imposed on federally-insured credit unions pursuant to the 
Economic Growth and Regulatory Paperwork Reduction Act of 1996 
(EGRPRA). Today, NCUA requests comments and suggestions on ways to 
reduce burden in rules that govern safety and soundness and anti-money 
laundering, consistent with our statutory obligations. All comments are 
welcome.
    We will analyze the comments received and propose burden reducing 
changes to our regulations where appropriate. Some suggestions for 
burden reduction might require legislative changes. Where legislative 
changes would be required, we will consider the suggestions in 
recommending appropriate changes to Congress.

DATES: Comment must be received on or before May 5, 2005.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on Fourth EGRPRA Notice'' in the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Mary Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    Public inspection: All public comments are available on the 
agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical 
reasons. Public comments will not be edited to remove any identifying 
or contact information. Paper copies of comments may be inspected in 
NCUA's law library, at 1775 Duke Street, Alexandria, Virginia 22314, by 
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, 
call (703) 518-6546 or send an e-mail to [email protected].

FOR FURTHER INFORMATION CONTACT: Ross P. Kendall, Staff Attorney, 
Office of General Counsel, at the above address or telephone (703) 518-
6562.

SUPPLEMENTARY INFORMATION: 

I. Introduction

    NCUA seeks public comment and suggestions on ways it can reduce 
regulatory burdens consistent with our statutory obligations. Today, we 
request input to help identify which requirements in two regulatory 
categories--Safety and Soundness and Anti-Money Laundering--are 
outdated, unnecessary, or unduly burdensome.

[[Page 5947]]

The rules in these categories are listed in a chart at the end of this 
notice. The EGRPRA review supplements and complements the reviews of 
regulations that NCUA conducts under other laws and its internal 
policies.
    We specifically invite comment on the following issues: Whether 
statutory changes are needed; whether the regulations contain 
requirements that are not needed to serve the purposes of the statutes 
they implement; the extent to which the regulations may adversely 
affect competition; the cost of compliance associated with reporting, 
recordkeeping, and disclosure requirements, particularly on small 
credit unions; whether any regulatory requirements are inconsistent or 
redundant; and whether any regulations are unclear.
    In drafting this notice, the NCUA participated as part of the 
EGRPRA planning process with the Office of the Comptroller of the 
Currency, Board of Governors of the Federal Reserve System, Federal 
Deposit Insurance Corporation, and Office of Thrift Supervision 
(Agencies). Because of the unique circumstances of federally-insured 
credit unions and their members, NCUA is issuing a separate notice from 
the four bank regulatory agencies, which are issuing a joint notice. 
NCUA's notice is consistent and comparable with the joint notice, 
except on issues that are unique to credit unions. For example, unlike 
the bank regulators, NCUA does not have a regulatory category governing 
securities activities, and so its notice makes no reference to that 
subject.

II.

A. The EGRPRA Review Requirements and NCUA's Proposed Plan

    This notice is part of the regulatory review required by section 
2222 of EGRPRA.\1\ The NCUA described the review requirements in our 
initial Federal Register notice, published on July 3, 2003 (68 FR 
39863). As we noted at that time, we anticipate that the EGRPRA 
review's overall focus on the ``forest'' of regulations will offer a 
new perspective in identifying opportunities to reduce regulatory 
burden. We must, of course, assure that the effort to reduce regulatory 
burden is consistent with applicable statutory mandates and provides 
for the continued safety and soundness of federally-insured credit 
unions and appropriate consumer protections.
---------------------------------------------------------------------------

    \1\ Pub. Law 104-208, div. A, title II, section 2222, 110 Stat. 
3009-414; codified at 12 U.S.C. 3311.
---------------------------------------------------------------------------

    The EGRPRA review required that NCUA categorize our regulations by 
type. Our July 3, 2003, Federal Register publication identified ten 
broad categories for our regulations.
    The categories are:

1. Applications and Reporting
2. Powers and Activities
3. Agency Programs
4. Capital
5. Consumer Protection
6. Corporate Credit Unions
7. Directors, Officers and Employees
8. Money Laundering
9. Rules of Procedure
10. Safety and Soundness

    To spread the work of commenting on and reviewing the categories of 
rules over a reasonable period of time, we proposed to publish one or 
more categories of rules approximately every six months between 2003 
and 2006 and provide a 90-day comment period for each publication. We 
asked for comment on all aspects of our plan, including: The 
categories, the rules in each category, and the order in which we 
should review the categories. Because the NCUA was eager to begin 
reducing unnecessary burden where appropriate, our initial notice also 
published the first two categories of rules for comment (Applications 
and Reporting and Powers and Activities). NCUA published its second 
notice, soliciting comment on consumer protection rules in the lending 
area, on February 4, 2004 (69 FR 5300), and its third notice, relating 
to other consumer protection rules, on July 8, 2004 (69 FR 41202). All 
our covered categories of rules must be published for comment and 
reviewed by the end of September 2006.
    The EGRPRA review then requires the Agencies to: (1) Publish a 
summary of the comments we received, identifying and discussing the 
significant issues raised in them; and (2) eliminate unnecessary 
regulatory requirements. Within 30 days after the Agencies publish the 
comment summary and discussion, the Federal Financial Institutions 
Examination Council (FFIEC), which is an interagency body to which all 
of the Agencies belong, must submit a report to Congress. This report 
will summarize significant issues raised by the public comments and the 
relative merits of those issues. It will also analyze whether the 
appropriate federal financial institution regulatory agency can address 
the burdens by regulation, or whether the burdens must be addressed by 
legislation.

B. Public Response and NCUA's Current Plan

    NCUA received eight comments in response to its first notice, four 
comments in response to its second notice, and six in response to the 
third notice. The comments have been posted on the interagency EGRPRA 
Web site, http://www.EGRPRA.gov, and can be viewed by clicking on 
``Comments.'' We are actively reviewing the feedback received about 
specific ways to reduce regulatory burden, as well as conducting our 
own analyses. Because the main purpose of this notice is to request 
comment on the next category of regulations, we will not discuss 
specific recommendations that we have received in response to our 
earlier notices here. However, as we develop initiatives to reduce 
burden on specific subjects in the future--whether through regulatory, 
legislative, or other channels--we will discuss the public's 
recommendations that relate to our proposed actions.
    On June 22, 2004, NCUA Chairman JoAnn Johnson testified about 
regulatory reform before the Senate Committee on Banking, Housing and 
Urban Affairs. Representatives from the federal banking agencies also 
testified, as did key private sector representatives from the financial 
institution industry. On August 27, Senator Mike Crapo, who is leading 
a financial services regulatory reform effort for the Senate Banking 
Committee, released a matrix detailing more than 130 burden reduction 
proposals that were made at the June 2004 hearing.

III. Request for Comment on Safety and Soundness and Anti-Money 
Laundering Rules Category

    NCUA is asking the public to identify the ways in which the rules 
in the category of safety and soundness and anti-money laundering may 
be outdated, unnecessary, or unduly burdensome. If the implementation 
of a comment would require modifying a statute that underlies the 
regulation, the comment should, if possible, identify the needed 
statutory change. The rules in this category are listed in the chart 
below. We note that the U.S. Treasury Department also administers rules 
under the Bank Secrecy Act that apply to Federal credit unions. These 
rules are beyond the jurisdiction of the NCUA. To the extent, however, 
that we receive comment raising significant issues about these rules, 
we will assure that the issues are identified in the FFIEC report to 
Congress and will notify the Treasury Department of the substance of 
the comments.
    We encourage comments that not only deal with individual rules or 
requirements but also pertain to certain product lines. A product line 
approach is consistent with EGRPRA's focus on how rules interact, and 
may be

[[Page 5948]]

especially helpful in exposing redundant or potentially inconsistent 
regulatory requirements. We recognize that commenters using a product 
line approach may want to make recommendations about rules that are not 
in our current request for comment. They should do so since the EGRPRA 
categories are designed to stimulate creative approaches rather than 
limiting them. We note, in this respect, that NCUA included both its 
lending and investment rules in its first EGRPRA notice (68 FR 39863, 
July 3, 2003), and that the same rules are included with this notice as 
well. The first notice solicited comment on the category of Powers and 
Activities, while in this notice we are focused on Safety and Soundness 
issues. Because aspects of both rules fall into each category, we are 
including them for this second time. There are several other rules, 
which we have placed in other categories, that also involve safety and 
soundness. Finally, we note that, as related to state chartered, 
federally insured credit unions, the inclusion of subpart B of 12 CFR 
part 748 in this category is a shorthand reference to a number of rules 
codified elsewhere in our regulations that have a significant safety 
and soundness impact. Comment is invited on all of these rules.
    Specific issues to consider. While all comments are welcome, NCUA 
specifically invites comment on the following issues:
     Need for statutory change. Do any of the statutory 
requirements underlying these regulations impose redundant, conflicting 
or otherwise unduly burdensome requirements? Are there less burdensome 
alternatives?
     Need and purpose of the regulations. Are the regulations 
consistent with the purposes of the statutes that they implement? Have 
circumstances changed so that the regulation is no longer necessary? Do 
changes in the financial products and services offered to consumers 
suggest a need to revise certain regulations or statutes? Do any of the 
regulations impose compliance burdens not required by the statutes they 
implement?
     General approach/flexibility. Generally, is there a 
different approach to regulating that NCUA could use that would achieve 
statutory goals while imposing less burden? Do any of the regulations 
in this category or the statutes underlying them impose unnecessarily 
inflexible requirements?
     Effect of the regulations on competition. Do any of the 
regulations in this category or the statutes underlying them create 
competitive disadvantages for credit unions compared to another part of 
the financial services industry?
     Reporting, recordkeeping and disclosure requirements. Do 
any of the regulations in this category or the statutes underlying them 
impose particularly burdensome reporting, recordkeeping or disclosure 
requirements? Are any of these requirements similar enough in purpose 
and use so that they could be consolidated? What, if any, of these 
requirements could be fulfilled electronically to reduce their burden? 
Are any of the reporting or recordkeeping requirements unnecessary to 
demonstrate compliance with the law?
     Consistency and redundancy. Do any of the regulations in 
this category impose inconsistent or redundant regulatory requirements 
that are not warranted by the purposes of the regulation?
     Clarity. Are the regulations in this category drafted in 
clear and easily understood language?
     Burden on small insured institutions. NCUA has a 
particular interest in minimizing burden on small insured credit unions 
(those with less than $10 million in assets). More than half of 
federally-insured credit unions are small--having $10 million in assets 
or less--as defined by NCUA in Interpretative Ruling and Policy 
Statement 03-2, Developing and Reviewing Government Regulations. NCUA 
solicits comment on how any regulations in this category could be 
changed to minimize any significant economic impact on a substantial 
number of small credit unions.
    NCUA appreciates the efforts of all interested parties to help us 
eliminate outdated, unnecessary or unduly burdensome regulatory 
requirements.

IV. Regulations About Which Burden Reduction Recommendations Are 
Requested Currently

          Safety and Soundness and Anti-Money Laundering Rules
------------------------------------------------------------------------
                                           Code of Federal  Regulations
                Subject                           (CFR) Citation
------------------------------------------------------------------------
Lending................................  12 CFR 701.21.
Investments............................  12 CFR part 703.
Supervisory Committee Audits and         12 CFR part 715.
 Verifications.
Security Programs......................  12 CFR 748.0.
Guidelines for Safeguarding Member       12 CFR 748, appendix A.
 Information.
Records Preservation Program and Record  12 CFR part 749.
 Retention Index.
Appraisals.............................  12 CFR part 722.
Examination............................  12 CFR 741.1.
Rules that Apply to Federally insured    12 CFR part 741, subpart B.
 state-chartered credit unions.
Report of Crimes or Suspected Crimes...  12 CFR 748.1(c).
Bank Secrecy Act.......................  12 CFR 748.2.
------------------------------------------------------------------------


    By the National Credit Union Administration Board on January 25, 
2005.
Mary Rupp,
Secretary of the Board.
[FR Doc. 05-2205 Filed 2-3-05; 8:45 am]
BILLING CODE 7535-01-P