Civil Money Penalties and NCUA
Samantha: Hello, this is Samantha Shares.
This episode covers N C U Aâs Authority
to Assess Civil Money Penalties as
outlined in its Enforcement Manual.
The following is an audio version
of that portion of the manual.
This podcast is educational
and is not legal advice.
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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 institutionÂ
affiliated party (see definition of
institution-affiliated party above).
The FCU Act specifies three tiers of
civil money penalties, as follows:
⺠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.
⺠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.
⺠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.
