By Angie Picardo
It’s no secret that mobile banking has exploded in the past five years. As smartphone and tablet saturation increases, consumers have begun to expect that their financial institution will offer a free mobile application (app) for their mobile devices that provides services such as checking account balances, finding ATMS, and transferring funds. Additionally, most banks offer other on-the-go services, such as text alerts and sites optimized for mobile use.
Concurrent with the trend towards mobile banking has been the growth in popularity of credit unions. After the Great Recession, many consumers became disenchanted with traditional banks and began shifting their money to credit unions, and with good reason. In many cases, credit unions offer consumers better rates on products such as mortgages and car loans, as well as more personalized and friendly customer service.
Credit unions are also becoming easier to join. While many credit unions used to only be available to those in certain professions, such as military members or educators, credit unions are opening their doors to a wider swath of consumers. Statistics related to credit union membership belie these trends; according to the National Credit Union Administration a federal agency, which oversees federal credit unions, credit union membership in the United States grew by 743,000 in the third quarter of 2012.
Given these developments, it’s not surprising that credit unions have been hard at work developing mobile technology that can compete with that of major banks. Most national credit unions now offer their customers some type of mobile banking app as well as other mobile banking services, and some, like Twin Star Credit Union, have adopted state-of-the art technology to provide a truly superior mobile experience.
Quality and sophistication of mobile services vary significantly between credit unions. Check out the graphic below to see the benefits and drawbacks of mobile banking services offered by five large credit unions; note that viewing transaction histories and finding ATMs is a feature available in all of the apps listed below:
Angie Picardo is a writer at NerdWallet, a financial literacy website where you can find advice on topics from credit union advantages to answering the question, “should I get a joint account with my spouse?”
Filed under: credit unions | Tags: compliance, directors, relief, testing, volunteers
As part of my CFPB presentation, I talk about how credit unions can better leverage volunteers as a cost cutting tool. I figured that I could put some more meat on the concept and perhaps get a decent post out of it, so here goes.
At one time in the movement, there were examples among credit unions of volunteers filling every role at the cooperative. We had volunteer CEOs and member service reps in addition to volunteer directors and committee members. What has happened to that spirit? Is it a sign of the times as to how people want to spend their time? Is it a failure of marketing to people by credit unions to get more people to volunteer?
If Clay Shirkey is at all right, people still have volunteer time available or as he calls it: “cognitive surplus.” If that is true, perhaps it is just a matter of wanting more volunteers and then marketing to members to become volunteers.
What can volunteers do? I propose that volunteers can be rounded up into task force assignments in order to handle various regulatory requirements cheaply rather than by hiring a vendor. At a baseline, they need to be at least 18 years old, bondable and a member of the credit union.
Three areas I want to focus on include vendor due diligence, risk analysis and compliance testing. All three of these functions have been required by NCUA and all three are resource intensive. Here’s how it would work:
Vendor due diligence. The board chair would appoint a task force of volunteers to pick 3 vendors for the particular service (say core processing) and then review their financial statements, reputation, experience and other attributes required by NCUA. The task force would then report it’s findings back to the Board of Directors after an appropriate time and make a recommendation (which the board is free to follow or not). This would take a great deal of pressure off staff and the directors themselves in meeting NCUA due diligence requirements at a cost of zero.
Risk analysis. Most compliance requirements at the credit union are risk based. This means that NCUA would prefer that you assigned risk values to every vulnerability and then build your policy around that. Put another way, you could spend a billion dollars on a BSA policy and it would still not be perfect. We don’t have billions to spend on policies so it helps to document the risks we have and put what resources we have around them. Therefore, the task force could meet, take various credit union compliance policies, document the particular risks that the credit union has on a 1 to 10 scale along with the credit union’s experience with the particular risk and then make a recommendation to the Board and to Management as to any changes that need to be made. This report could then be placed in the file with the particular policy (BSA, Disaster Recovery, Social Media, etc.) to be shown to the examiner later.
Compliance testing. Most material credit union policies need to be reviewed and tested annually. Volunteers can be trained to do ECOA testing (see how members are treated, review past applications and look for discrimanatory effects of policies), Disaster recovery (table-top testing or even creating a mock disaster), BSA (review of cash data versus CTR filings, review of SAR quality, review of OFAC compliance) and a host of other things. What is either a time consuming task for staff or an expensive task to hire a vendor to complete can be done quite effectively at no cost by volunteers.
The new compliance burden is real. 700 credit unions no longer exist since the passing of the Dodd Frank act. Volunteers are a credit union’s secret weapon. It is time for credit unions to reach out to volunteers again to meet these increasing compliance demands.
Filed under: credit unions
For the third year in a row, Weltman, Weinberg & Reis sent out a call for nominations to all Ohio credit unions for our 2013 WWR Outstanding Community Partner Award. Our goal is to honor credit unions that actively partner with their local communities to provide educational, community outreach and/ or community service programs. For the third year in a row, the response was enthusiastic and impressive, making selecting a winner very difficult! The winning credit union was Taleris Credit Union of Cleveland, Ohio. Taleris Credit Union’s vision supports the initial principals of the credit union movement: “People Helping People.” 2012 was a difficult year financially for many of the credit union’s members and its surrounding community, and yet Taleris maintained its steadfast goal of helping individuals and families in need. Taleris offered free financial counseling to its members through web based programs as well as live, onsite financial seminars. Taleris supported their community through awarding two $1,000 scholarships to undergraduate students and sponsoring various community events, as well as youth based sporting teams. The staff helped raise money for several charities in 2012 including The United Way, The Children’s Miracle Network, Project Hope, Yuletide Hunger Program, City Mission of Cleveland, Hoo-ah Christmas Tree Project for US Troops and the Tommy D’Amico Fund.
On April 23, 2013, John Porter, a Partner in the Credit Union Practice Group and Lauren Halton, a credit union client representative for Weltman, Weinberg, & Reis Co., L.P.A. (WWR), presented Robin Thomas, CEO of Taleris Credit Union of Cleveland, Ohio with the 2013 WWR Outstanding Community Partner Award at the Ohio Credit Union League InVest48 annual convention held at the Columbus Convention Center. Along with a crystal trophy, Taleris Credit Union was awarded a $1,000.00 check to assist with their future charitable endeavors.
All nominees demonstrated a company-wide commitment to community service and were recognized for their participation. Other nominees included CME Federal Credit Union (Columbus), Emery Federal Credit Union (Cincinnati), First Service Federal Credit Union (Groveport), and Firelands Federal Credit Union (Bellevue).
This award is meant to celebrate credit unions in Ohio that are investing time and resources into their communities and inspiring others through their work. We congratulate all our nominees on the work and commitment they have demonstrated, are proud to present Taleris Credit Union as our winner and look forward to supporting credit unions for years to come.
Lauren Halton is the Credit Union Client Representative in the Columbus office of Weltman, Weinberg & Reis Co., LPA. She can be reached at 614.857.4382 and email@example.com.
*Pictured left to right: John Porter (WWR), Robin Thomas (CEO, Taleris Credit Union) and Lauren Halton (WWR).
Filed under: credit unions | Tags: "credit union", collections, legacy trusts
Ohio did it. A year or so ago, one of our compliance lawyers gave me an article describing how Ohio’s legislature was looking to make Ohio like the Cayman Islands. Effective March 27 of this year, Ohioans can create their own legacy trusts including spendthrift trusts. Oh, you say? So what does that mean? Before I read that article, a year ago I had no idea either.
Prior to Ohio’s Legacy Trust Act, a person or persons could put assets into a revocable trust and have complete control over the assets as the grantor. The trouble is that such a trust is easily reached by creditors. Under Ohio law, it offers little by way of protection from being attached by creditors to satisfy a debt. Certainly, a person or persons could create an irrevocable trust and transfer assets into that and assuming no fraudulent transfers, the assets would not be attachable by creditors. However, the grantors creating the trust would also divest themselves of ownership of the assets and be subject to the whims of the trustee.
Ohio’s Legacy Trust Act changes all that. Now, a person can set up a trust for his or her own benefit and while it needs to have a qualified trustee, the grantor can receive income from the trust and even take some of the principal out of the trust, as much as 5% per year.
Let’s look at an example. Benny Bumbles buys a house for $200,000 and gets a 12 year first mortgage from Anthrax Research Federal Credit Union in 2011. In February of 2013, Benny inherits $500,000 from his Uncle (Milty). In April of 2013, Benny establishes the Bumbles Family Trust and funds it with the money he inherited, naming ABC bank as Trustee. Things go swimmingly for a few years until Benny is let go from his job as virus containment specialist at the local research center. All is not lost however as Benny still makes about $25,000 a year from the investments held by his trust. However, Benny, last year, also financed a Corvette from the credit union as well as a Harley Davidson motorcycle six months later. After a few months of realizing that $25,000 a year doesn’t go as far as it used to, Benny stops paying ARFCU on all three loans. When the collector calls Benny, he tells her: you can’t do a darn thing to me because Ohio has my back! To emphasize this to her, Benny rides his motorcycle to the credit union and does wheelies in the parking lot until he is arrested by the Anthrax County Sheriff.
Assuming ARFCU gets the Harley from the Sheriff and picks up the Corvette, sends the proper notices and sells them at auction, it presumably will have a deficiency balance. Let’s say this comes to $25,000. The credit union also forecloses on the house and because Benny decides to move in with his mother, he does nothing to stop it and the credit union ends up with a deficiency balance on the house of $60,000. Can the credit union do anything to attach the $500,000 in the Bumbles Family Trust to collect Benny’s debt?
You might think that because the mortgage pre-dates the trust, that the credit union could do something, but that’s not the way the new statute works. An existing creditor has 18 months to bring an action to avoid a transfer into the trust from the time the asset is transferred to the trust or 6 months after the creditor could have discovered the transfer to the trust (and Ohio has a recording requirement that constitutes constructive notice) or the creditor may extend this by 3 years by sending a demand letter alleging a fraudulent transfer in funding the trust (and I am paraphrasing). See ORC 5816.07 for the exact language.
Thus the answer is no. The credit union can liquidate Benny’s property and proceed against Benny personally, but the statute of limitations has expired with respect to the trust.
Will credit unions start seeing these types of trusts? Possibly. There is some question as to whether this is worthwhile for smaller amounts of money given that you still need a qualified trustee. But it is hard to say. In any event, Ohio is now in the asset protection business. If nothing else, this means more trust work for the banks. I wonder if a trust CUSO in Ohio catering to this sort of thing would be viable?
Filed under: credit unions
Two years ago, I attended the CUES CEO Institute at Wharton School of Business. One of the most impressive speakers was a man from Vongola Consulting named Rob-Jan de Jong. He talked to us about a concept called ‘future priming’.
Basically, it is the idea that the leaders of your credit union should periodically spend time considering what the future might look like and how you can prepare for it. This ‘primes’ your mind to spot shifts in trends. Inevitably, if you discuss something, you will see examples of it. (That’s called the Baader-Meinhof Phenomenon, by the way).
Read this list and then ask yourself, if true, what would it mean to our credit union? How would we have to evolve? What could we do to excel?
Well, not cars, but cars as we know them will be gone. I predict that in ten years almost all cars will be self-driving, like the one in this video.
Cars that can drive themselves will have fewer accidents (less left up to human error), will be able to navigate rationally to reduce traffic (no more lookyloos that slow down the flow of traffic) and you’ll have far more time to check Facebook on your morning commute AND! They probably can park themselves. How can that not be in our future?
2. Homogeneous Office Spaces
Even though self-driving, self-parking cars will eventually cut our commutes in half, we are going to wake up to the fact that spending more than 10 minutes in the car for a commute is a waste of productivity and a serious drain on quality of life. We are also going to come to terms with the fact that working from home doesn’t quite work.
As companies grow, I think they will look more at housing employees in shared workspaces, like Office Nomads. Instead of figuring out how to build more offices and provide enough parking and support various locations or figuring out how to set each employee’s house up with the proper tools to work from home, I think companies will eventually rent desks in shared workspaces.
Employees will not be working from home, but they will be working near home. Employers will rent a handful of desks near where employees live. An employee won’t be asked to drive 40 minutes into work, but they won’t be isolated in their office/bedroom 40 hours a week. Instead, they will drive five minutes to an office that they share with four of their co-workers and ten people from other companies.
The magic is the collaborative environment. Everyone I know who rents a desk in spaces like this swears by the innovative energy sparked by working side-by-side with someone outside of your industry. For creative, motivated employees, this is an ideal way for credit unions to break free from the great echo chamber known as the credit union industry.
The way we navigate and interact with television is already blurring the lines between TV and computer. Add to that our addiction to touch screens and I’m certain that the television in ten years will let you scroll through channels without using a remote. Probably, you’ll just need to say “switch” or “pause” or “fast forward” and your screen will obey.
You’ll also be able to shop for clothing by watching an avatar with exactly your body type try on clothing instantaneously. Oh, and then post it to Facebook to see what your friends think of it before you order it.
4. Phone Numbers
Watching my three young daughters interact with technology, it is clear that the difference between an iPhone and an iTouch or iPad is lost on them. They communicate through text and Facetime such that phone numbers seem irrelevant. Since phone numbers are tied to one device and are dependent on expensive phone plans, I predict that Facetime-type communication that can be transferred from one device to another will overtake mobile phone technology just as mobile phones are currently edging out landlines.
This is a gimme because we’ve all been saying it for at least two years. But soon you’ll have apps that allow you to make purchases, unlock your house, check out a book from the library, show proof of insurance, double as a license, and talk to an ATM.
Shari Storm is Senior Vice President and Chief Marketing Officer of Verity Credit Union and is the author of the book “Motherhood is the New MBA”, available here: http://www.amazon.com/Motherhood-New-MBA-Parenting-Skills/dp/0312544316/ref=sr_1_1?s=books&ie=UTF8&qid=1314126290&sr=1-1
By Ashley L. Sweeney, Attorney
Multi-featured open-end lending (MFOEL) is a practice used for nearly 35 years by over 3,500 credit unions. However, recent developments and regulations might have credit unions nationwide ushering in a new (and possibly improved) type of lending.
Under MFOEL plans, credit unions have a single lending contract with a member which covers multiple lending products. In the past, these plans have been used to deliver the majority of credit unions’ consumer loans, despite the fact that they tend to be costly. However, in 2008, the Federal Reserve made changes to Regulation Z which affected MFOEL. These changes further defined open-end lending and forced credit unions to review their policies and procedures in order to continue using MFOEL as a primary consumer lending strategy. Nevertheless, many of the changes to the regulation proved confusing for credit unions across the county.
This past year, after the urging of the Credit Union National Association (CUNA) and CUNA Mutual Group, the Consumer Financial Protection Bureau (CFPB) and the National Credit Union Association (NCUA) revisited MFOEL and provided additional guidance on these plans. This guidance was in the form of a letter to federal credit unions, issued in July 2012.
The NCUA Letter to Federal Credit Unions, 12-FCU-02, provides an overview of the best practices credit unions can use to ensure proper underwriting and disclosure for all of the different types of loans they might issue to their members. It reinforces that a credit union may not conduct new underwriting for an individual request for a new advance in a MFOEL program. However, the letter states that “[c]redit unions using MFOEL plans are permitted to verify a person’s creditworthiness to ensure it has not deteriorated (and revise credit limits and terms accordingly)” provided this is reviewed only on a periodic or ad hoc basis and not triggered by new requests for advances.
The letter also discusses the blended approach which some credit unions utilized following the often confusing changes to Regulation Z. The blended approach is a multi-featured lending plan that “is not a MFOEL plan.” Instead, it combines both open-end and closed-end credit. The blended approach is also less costly than a traditional MFOEL plan because it allows credit reports to be performed on an ad hoc basis as opposed to a global credit update. It appears then that the blended approach contains the best of both worlds of lending, provided that appropriate disclosures are given to members.
Of course, credit unions can continue to use MFOEL plans by following the policies and procedures outlined by the CFPB and the NCUA. However, now credit unions can also consider lending using the more cost-efficient blended approach. Either way, as long as proper procedures are followed and disclosures are made, credit unions can continue to provide multi-featured lending in the best interest of their members.
 Bill Klewin, Focus On the ‘Open’ In Open-end Lending, CUNA LENDING COUNCIL (July 8, 2009), http://www.cunalendingcouncil.org/news/2970.html.
 Id. Examples of common MFOEL products include share overdrafts, unsecured lines of credit, share-secured lines of credit, vehicles, and home equity lines of credit. NCUA Letter to Federal Credit Unions, 12-FCU-02 (n. 2), NATIONAL CREDIT UNION ADMINISTRATION (July 2012), available at http://www.ncua.gov/Resources/Pages/LFCU2012-02.aspx.
 Klewin, supra note 1. MFOEL can make the lending process more costly because the lender must do a portfolio-wide credit update as opposed to one update performed only for those members seeking an advance.
 Regulation Z previously regulated the rules of MFOEL, however, this authority is now vested in the Consumer Financial Protection Bureau (CFPB). Multi-featured Open-end Lending Guidance Revised, NATIONAL ASSOCIATION OF FEDERAL CREDIT UNIONS (July 23, 2012), http://www.nafcu.org/News/2012
 Klewin, supra note 1.
 Credit Union Association of Rhode Island, NCUA Offers Guidance on Multi-Featured Open-End Loans, CUNA LENDING COUNCIL (August 6, 2012), http://www.cunalendingcouncil.org/news/4915.html.
 NCUA Letter to Federal Credit Unions, supra note 2.
 Id. “If a credit union does verify credit history and other factors in response to a request, then the transaction must be treated as a closed-end loan and the credit union must follow closed-end disclosure rules.” Multi-featured Open-end Lending Guidance Revised, supra note 4.
 NCUA Letter to Federal Credit Unions, supra note 2.
Ashley Sweeney is an attorney of Consumer Collections located in the Pittsburgh office of Weltman, Weinberg & Reis Co., LPA. She can be reached at 412.338.7147 and firstname.lastname@example.org.
By Cheryl D. Cook, Attorney
If capital is the fuel that drives business development, then it should stand to reason that the more business lenders in the market, the better. According to the United States Small Business Administration, small businesses accounted for 65% (or 9.8 million) of the new jobs created between 1993 and 2009.
However, because credit unions are limited in their ability to extend business loans to a relatively small percentage of their total assets, credit unions occupy a smaller share of the business lending market. Absent an exception from the National Credit Union Administration (NCUA), credit unions are not permitted by law to have outstanding member business loans exceed 12.25% of their assets.
The Small Business Lending Enhancement Act (S. 2231) seeks to increase this limit to 27.5% of assets. The bill includes controls, such as a requirement that, to exceed the 12.25% limit, credit unions would need to be well-capitalized and demonstrate five years of sound underwriting and servicing of business loans. In addition, the bill would maintain close NCUA control to monitor expansion of the member’s business lending portfolio to the 27.5% proposed in the legislation.
Banks, in general, have opposed increasing credit union business loans at higher percentages of their asset base, claiming that because credit unions enjoy nonprofit status that shields them from state and federal taxes, they would have an unfair business advantage.
In addition, there have been reports that smaller credit unions also oppose the proposed legislation because they believe that passage would expose them to increased liability if they have to share responsibility for failure of business loans made by larger credit unions chasing higher revenues at the expense of sound underwriting and risk management practices.
In April 2012, Dennis Moriarity, the treasurer-manager of Unity Credit Union, a local Michigan credit union, wrote a letter to the United States Senate and the Banking, Housing and Urban Affairs committee, which has now become public record, expressing his concern about the potential risk to credit unions that do not participate in business lending.
“Our concerns lie with the exposure that this enhanced authority would present to the thousands of credit unions that currently do not participate in business lending or are at ease operating within the current limits of the law,” Moriarity said. “The exposure is to our reserves and retained earnings which could eventually be confiscated to pay for the mistakes of lenders who are unfamiliar with the complexity of business lending or who might ignore risks in pursuit of revenues.”
However, those supporting the legislation have suggested that credit unions’ ability to offer these loan products to their members would provide growth opportunities, and that the banks’ claim of unfair tax advantages is just sour grapes.
According to Bill Cheney, President and CEO of Credit Union National Association (CUNA), in a published statement, “…raising the 12.25% cap to 27.5% would produce a conservatively-estimated first-year increase of $14 billion in loans and 157,000 jobs nationally.” Cheney further noted, “S. 2231 is about giving the credit unions with the most business lending experience the opportunity to continue to lend to their members, and continue to help in the economic recovery.”
Credit unions interested in increasing their volume of business loans should focus on their evaluation of business customers before making loans. Proper investigation and underwriting on the front end can save a great deal of aggravation on the back end in any loan transaction, and a track record of well-performing business loans may go a long way to support the increase on business lending limits should the legislature move forward on this law during the next year.
In any event, it does not appear that the issue will be resolved soon. While greater availability of capital would encourage business growth, the events of the last several years mean that any proposal to increase lenders’ risk will undergo strict scrutiny in an attempt to head off further bail-outs or other disasters. Input from credit unions on both sides of the debate will be necessary to provide legislators with the information they need to make further decisions on this topic.
 As of Monday, November 26, 2012, the legislation was discussed as a bill for the Senate floor that week, but remains in committee. It is unlikely to move further until 2013.
By David A. Wolfe, Attorney
Paper billing is a predictable expense and credit unions are understandably eager to go paperless for their member communication, however, many members cling to traditional payment methods. Online banking and bill pay initiatives require a significant investment, but as credit unions switch to electronic statements, they are experiencing increased traffic to their websites and immediate, hard cost reductions.
The E-SIGN Act, enacted in June 2000, provides a general rule for validity of electronic records and allows credit unions to send customers electronic mortgage statements where the member has affirmatively consented to receiving these statements in electronic form. The statute requires credit unions to provide members clear and conspicuous statements of their right to have the record made available on paper and the right to withdraw consent, including any conditions, consequences and fees in the event of such withdrawal; whether the consent applies only to the particular transaction that triggered the disclosure; describing the procedures the consumer must use to withdraw consent and to update information needed to contact the consumer electronically; and informing the consumer how they may request a paper copy of a record and whether any fee will be charged for that copy.
Prior to consenting to the use of an electronic record, under the E-SIGN Act, the credit union must provide the member with a statement of the hardware and software requirements for access to and retention of electronic records. Finally, if the member consents electronically or confirms their consent electronically, it must be in a manner that reasonably demonstrates the member can access information in the same electronic form that will be used to provide the information.
Pursuant to the Dodd-Frank legislation, the Consumer Financial Protection Bureau, (CFPB), has proposed a new rule to allow credit unions to send electronic mortgage statements if the member consents and the full E-SIGN Act consent process would not be required. Section 128(f)(2) of the Truth in Lending Act (TILA), provides that periodic statements “may be transmitted in writing or electronically,” and the CFPB’s proposal would allow credit unions to meet this requirement by sending the member an e-mail notification that the statement is available instead of e-mailing the actual statement. The credit union would only have to obtain affirmative consent by the member to receive their periodic mortgage statements and not full compliance with E-SIGN verification procedures.
The CFPB is currently considering public comments, and its final rule is due January 21, 2013.
David is an attorney in the Consumer Collections unit of Weltman, Weinberg & Reis Co., LPA, in the Michigan office. He can be reached at 248.362.6142 and email@example.com.
Filed under: credit unions
By Anne M. Smith, Attorney
When asking for identification, institutions must be aware of an important federal statute that prohibits photocopying of a U.S. government ID. Often, in situations such as real estate closings, a lender will make a copy of an ID card for its records, an action which is acceptable with most forms of identification. The U.S. government, however, has a vested interest in protecting its personnel, and government security in general, and has made it a crime to photocopy a U.S. government ID.
Criminal elements and terrorist organizations consider U.S. government identification as a high value asset that can be used against the U.S. military. Possible counterfeiting or “cloning” of a U.S. government identification card, whether held by a military member, family member, or a Department of Defense employee, is the reason for prohibition of photocopying of such an ID under TITLE 18 U.S.C. § 701: Official badges, identification cards, other insignia, as set out in part below:
“Whoever manufactures, sells or possesses any badge, identification card or other insignia of the design prescribed by the head of any department or agency of the United States for use by any officer or employee thereof, or any colorable imitation thereof, or photographs, prints, or in any other manner makes or executes any engraving, photograph, print, or impression in the likeness of any such badge, identification card, or other insignia, or any colorable imitation thereof, except as authorized under regulations made pursuant to law, shall be fined under this title or imprisoned not more than six months, or both.”
The federal statute is clear about the prohibition, but few institutions are aware of the copying ban. Per the Department of Defense website at www.cac.mil, there are situations in which photocopying of U.S. government identification is permitted. Such copies are permitted to facilitate medical care processing, check cashing, voting, tax matters, compliance with appendix 501 of title 50, U.S.C. (also known as “The Servicemember’s Civil Relief Act”), or administering other military-related benefits to eligible beneficiaries.
When requesting ID for photocopying purposes, lenders should be mindful of this ban, and request other forms of identification if they are to be photocopied. Other options for identification include:
- State driver’s license or other photo ID
- Written statement of verification of military service from member’s chain of command
- Proof of Service letter confirming service dates
- Statement of Service from local personnel office confirming military status
Violation of this federal statute can result in up to six months imprisonment, and/or a fine in an unstated amount. The statute formerly stated a fine of $250, but that has since been revised in favor of more ambiguous terms. One final reminder: Both the institution and the card holder should ensure that the card holder’s social security number is redacted from any copies.
Anne Smith is an attorney of the Real Estate Default Group of Weltman, Weinberg & Reis Co., LPA, located in the Cincinnati office. She can be reached at 513.333.4012 and firstname.lastname@example.org.
Suspicious Activity Reports are unique documents among all the paperwork that a credit union must process. No other document comes to mind that has the protections and ability to affect other laws than the SAR. Few other documents carry the heavy civil and criminal penalties that the SAR does if the document is not timely and properly filed. Moreover, no other document must be kept secret at the credit union with the degree of intensity that the SAR requires.
Sound intriguing? Perhaps it is from the law enforcement side. However, most folks on the credit union side of the world never imagined that they would cross into the realm of law enforcement and yet that’s really what BSA is. All editorials aside, a client recently asked me whether or not credit union directors needed to look at the actual SAR documents every month or would just giving a report as to how many SARs were filed in a given month suffice? The answer is that no one at the credit union should look at a SAR unless he or she has a legitimate business purpose to so view it. This includes directors. Unless a director is part of a BSA audit team or has some other legitimate “need-to-know” basis, he or she should not see the actual SAR documents or paperless versions thereof.
Section 748.1 of the NCUA Regulations states that the management of the credit union must notify the board of SARs filed by the credit union. The NCUA has further explained that this means notifying the board every 30 days as to when SARs are filed. FinCEN has also stated:
Additional risk-based measures to enhance the confidentiality of SARs could include, among other appropriate security measures, limiting access on a “need-to-know” basis, restricting areas for reviewing SARs, logging of access to SARs, using cover sheets for SARs or information that reveals the existence of a SAR, or providing electronic notices that highlight confidentiality concerns before a person may access or disseminate the information.
See FIN-2012-A002. See also FIN-2010-A014.
It is also important to remember that the person upon whom the SAR is being filed can never be told about it. This applies to directors, officers and employees as well. SARs are, in effect, legal plutonium and must be handled with extreme caution. If this sounds wrong or alien or counter-intuitive, understand where this is coming from. SARs are a law enforcement tool. The rules surrounding them sound more in the secret side of law enforcement than in the open and caring environment one normally finds in the credit union.