Following the rapidly evolving situation in Ukraine and Russia, California Department of Financial Protection and Innovation (DFPI) Commissioner Cloey Hewlett issued guidance to credit unions, banks, money transmitters and others on March 4 reminding financial institutions to follow state and federal regulations and be mindful of elevated cybersecurity risk.

All financial institutions licensed by the DFPI are subject to the regulations issued by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The DFPI guidance notes that virtual currency may be used to avoid sanctions by individuals and entities prohibited from engaging in financial transactions. An elevated cybersecurity risk posed by the war in Ukraine also requires licensees to take steps to mitigate cybersecurity threats and take increased measures to segregate networks for Ukrainian and Russian offices.

The guidance does not supersede any reporting requirements in the event of a cybersecurity incident. Licensed depository institutions are reminded to report cyber security incidents to the DFPI and their primary federal regulator. Incidents should be reported as soon as possible once the institution is aware of it.

At this time, the Department is interested in receiving notices of increased cyber activity even if it does not result in a reportable incident, especially if it is attributable to Russia or Eastern Europe. See the Notice to DBO of Extraordinary Events of Public Interest for additional information. 

Credit Union CAMEL Ratings Change effective April 1
The DFPI's Office of Credit Unions will update the current CAMEL (Capital adequacy, Asset quality, Management, Earnings, and Liquidity) based rating system by integrating an “S” component to assess sensitivity to market risk and separate the “L” component to continue to address the evaluation of liquidity. The change from a CAMEL to a CAMELS based rating format will take effect for examinations beginning on or after April 1, 2022.

The evaluation of Sensitivity will be rated on a scale of “1” to “5”, with “1” being highest, as is currently used for each component assignment of the CAMELS rating, and will be based on, but not limited to the following criteria:

• Sensitivity of current and future earnings and economic value of capital to adverse changes in market prices and interest rates.
• Ability to identify, measure, monitor and control exposure to market risk considering a credit union’s size, complexity, and risk profile.
• Nature and complexity of interest rate risk exposure.
  
  

Current examination practices include a review of both the credit union’s interest rate risk and liquidity management policies, procedures, controls, reporting, management oversight, and risk mitigation strategies. Therefore, we do not anticipate this change will materially impact current examination process.

The change by the DFPI Office of Credit Unions is designed to coincide with the concurrent change to the CAMELS rating system adopted by the National Credit Union Administration (NCUA) that becomes effective for federal credit union examinations starting on or after April 1, 2022. 

DFPI to Host Student Loan Resources Webinar
The DFPI is hosting a Student Loan Resources webinar on March 29, 2022, at 11 am in partnership with the Consumer Financial Protection Bureau (CFPB), the Student Borrower Protection Center (SBPC), the East Bay Community Law Center, and several other organizations who provide education, assistance, and even free legal services to student loan borrowers.

With student loan repayments expected to resume on May 1, 2022, this webinar will be the first in a series hosted by the department to inform and empower federal student loan borrowers about their rights, repayment options, the Public Service Loan Forgiveness (PSLF) waiver that ends on Oct. 31, 2022, and even loan-dischargeable circumstances.

The "Get Help with Your Student Loan" webinar is free and open to the public. Please help us share this great opportunity or consider attending yourself. Register for this webinar here.

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