The New York Credit Union Association is seeking comments from state-chartered credit unions on the 1996 DFS guidance letter, “Vacation Policy as an Internal Control Safeguard to New York banking organizations.”
The guidance letter requires state-chartered credit union employees in sensitive positions to take at least two consecutive weeks of leave annually for fraud prevention. On the federal level, the NCUA only strongly recommends a one-week absence for federally chartered credit union employees in similar roles.
The Association intends to send a comment letter to DFS regarding guidance based on feedback from state-chartered credit unions, including a detailed response with as much anecdotal evidence to support their positions.
The move comes after Acting DFS Superintendent Adrienne A. Harris issued a request for information to banking organizations regarding the guidance letter earlier this month.
“In our November conversation with CDFIs and MDIs, it came to our attention that the 1996 DFS Guidance Letter, “Vacation Policy as an Internal Control Safeguard,” as it currently stands, may create significant operational challenges for small financial institutions which are critical sources of access to financial services and products in underserved communities,” Harris said. “Implementation of the vacation policy continues to be an internal control safeguard, but we are taking swift action to better understand how the policy impacts our regulated institutions — especially CDFIs and MDIs — which will inform potential updates to our guidance.”
The following are questions to the Association would like state-chartered credit unions to consider providing responses to by Jan. 28, but welcomes all comments and concerns regarding the guidance letter:
- How does the current mandatory absence policy affect your institution?
- Is a five-day absence, both physically and electronically, sufficient to detect irregularities?
- Could a similar level of safety and soundness be achieved by having employees rotate responsibilities instead of being physically absent?
- What types of exceptions should be made? Should smaller institutions be treated differently?
- What types of positions should be considered “sensitive” and which authority should determine the sensitivity of positions?
- Other recommendations or suggestions that balance safety and soundness with minimizing operational challenges?
Responses to the above questions may be sent to firstname.lastname@example.org. The Association thanks you for your responses.