June 15, 2005

NCUA Letters and Alerts
     Letter to CUs 05-CU-08: Financial Trends. This letter provides a summary of CU financial trends for the first quarter, 2005.

     Letter to CUs 05-CU-09: Bank Secrecy Act Compliance Guidance. Compliance with BSA is a key component in the detection and prevention of money laundering and terrorist financing. All financial institutions must comply with BSA. Recognizing that CU staff and officials have questions about how to comply with the BSA, NCUA has created guidance, Frequently Asked Questions and Answers on BSA. NCUA points out in this letter that this guidance does not supersede or replace the requirements established in Part 748 of NCUA Rules and Regulations and Title 31 of the Code of Federal Regulations.
     In the just released guidance, CUs can expect a review of the similarities and differences in procedures in regard to OFAC and BSA; who may complete an independent testing of BSA compliance for a CU; what is appropriate training for CU staff; and what information should be recorded in a monetary log – among other things. NCUA encourages CUs to carefully review their practices for compliance with BSA.

     Regulatory Alert #05-RA-05: Customer ID Program FAQs. The USA Patriot Act requires CUs and other financial institutions to establish and maintain documentation of a Customer Identification Program (CIP). The purpose of a CIP is to reasonably identify members opening accounts. To ensure consistency among all institutions, a jointly drafted list of frequently asked questions and answers (FAQs) interpreting CIP requirements has been approved, which includes both FAQs previously published in January 2004 and new FAQs.

Risk Alert #05-01: Specialized Lending Activities. The NCUA has issued a risk alert regarding specialized lending activities. NCUA points out that the sharp increase in the number of CUs engaged in outsourced, indirect and subprime automobile lending has resulted in heightened concern that the credit unions engaged in this type of lending activity may not have effective controls.

FACT Act Rules on Medical Info
The federal bank, thrift, and CU regulatory agencies have issued interim final rules under the Fair Credit Reporting Act (FCRA) that create exceptions to the statutory prohibition against obtaining or using medical information in connection with credit eligibility determinations. The interim final rules also address the sharing of medically related information among affiliates. The rule should be effective in about nine months.
For more information about this rule go to: http://www.cuna.org/compliance/member/eguide/eguide_fcra_status.html

FTC Issues Model Forms and Procedures for ID Theft Victims
The Federal Trade Commission, in consultation with other regulators including NCUA, has developed model forms and procedures, as required under the Fair & Accurate Credit Transactions Act (FACT Act), to be used by identity theft victims for contacting and informing creditors and credit bureaus about the fraud. The FTC guidance, titled Take Charge: Fighting Back Against Identity Theft, contains descriptions of different kinds of ID theft, an “ID Theft Affidavit” that a consumer can use to challenge a creditor on an account opened fraudulently in the consumer’s name, and sample letters to resolve these types of problems. A copy of this guidance is found on CUNA’s website: www.cuna.org/reg_advocacy/member/analysis/ftc_042905.html

Use New FinCEN Form in July
The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has revised the “Designation of Exempt Person” form. The form is used by CUs to designate their eligible members/customers as exempt from the requirement to report transactions in currency over $10,000, meaning the institution does not have to file Currency Transaction Reports (CTRs) on those particular members. The new form to replace the form currently being used (TD F90-22.53) will be FinCEN Form 110. Previous editions of this form will not be accepted in 2006.

TRAINING OPPORTUNITIES

Workshop on How to Recruit New CU Volunteers to Be Held in July
     Let’s face it. One of the most critical challenges facing your CU today is the development of new volunteers for the board of directors and committees.
     Michael Hudson, Ph.D., who spoke at this year’s League annual meeting, will conduct this interactive workshop that will delve into five critical aspects of volunteer development. Participants will receive a workbook they can use to implement the ideas in their CUs.
     The session will be held on Wednesday, July 10, from 5:30-8:30 p.m. at Del Tech in Dover, and a light meal will be served. The fee is $35 per person (after the fourth paid registration, all other registrants from one CU are free). A detailed registration brochure has been mailed to all CU board chairs and CEOs.
     We must have 30 participants to hold this session, so please register early. The registration deadline is July 6.

Not Too Late to Register for Free PALS Workshop in Baltimore
     Nine Delaware CU officials from the following CUs – Dover, DPL, Milford Memorial, Newport Site Employees – and the League have registered for this workshop to be held on July 7. Close to 200 people are expected at the event.
     At the PALS workshop, panels of CU leaders will describe their efforts to compete with predatory lenders on their turf – communities where predatory lenders prey upon consumers with lower incomes and lower credit scores. The second panel will focus on “Beating Predatory Lenders at Their Own Game.” This is an opportunity to learn about credit unions’ special loan programs, financial education, and other needed services to provide members with affordable alternatives to predatory lending.
     The workshop will take place from 10 a.m. - 3:30 p.m. at the Hyatt Regency on Baltimore’s Inner Harbor, just a few blocks from Oriole Park at Camden Yards. To view the agenda and register for the free workshop, visit http://www.ncua.gov and click “PALS Workshop Registration, July 7, 2005” or contact Bernadette at the League.

SYSTEM NEWS

Consumer Brochure on “Phishing” Available for Your Members
Three Delaware CUs have provided their members with a new brochure produced by federal financial regulatory agencies on a new type of Internet scam called “phishing.” Delaware, Dover, and New Castle County Delaware Employees FCUs have engaged Sue Smiley at CU ink, Inc., to print this two-page camera ready brochure suitable as a statement stuffer. Since it is camera ready, the brochure cannot be customized. For more information about the cost to print the brochure, contact Sue Smiley at 800-442-3676, ext. 103. To see a copy of the full color brochure, go to http://www.ncua.gov/Publications/brochures/IdentityTheft/PhishBrochure-Web.pdf

Last Chance to Contribute to Tsunami Appeal
So far, the National Credit Union Foundation’s appeal for tsunami relief to rebuild CUs demolished in South Asia has netted a total of $726,090.60. CUs can still contribute up to June 30. Checks can be sent to South Asian Tsunami Appeal, National Credit Union Foundation, P.O. Box 78880, Milwaukee, WI 53278-0880.

League Requests CU Response

The League has recently coordinated two programs that support political advocacy. Please let Alice Smith know if your credit union is participating in these programs.

Dress Down Days. Two CUs – New Castle County Delaware EFCU and Delaware Alliance – have sent back their participation form for this effort to help raise money for CULAC. CU employees can participate anytime during the summer months.

Project Zip Code Update. The League has sent all CUs updated disks for Project Zip Code. The new disks update district and membership information, and therefore it is important that all CUs – even those who previously ran the program – participate again. Project Zip Code is an important tool to get legislators’ attention when our competitors are pushing for anti-CU laws. It is also valuable to CUs looking into branch expansion or ATM locations.

DELAWARE FIRST FCU is sponsoring a “You Can Be a Millionaire for a Day” promotion in June for all new members opening a share account and one additional deposit account. Each winner will receive the equivalent of one day’s dividend on $1 million credited to his/her account.

COMMUNICATIONS/PUBLIC RELATIONS

Latest edition of Essentials newsletter published. The Spring/Summer edition of Essentials newsletter is now available on the League website, www.dcul.org. The newsletter, although especially designed for credit unions under $10 million in assets, has valuable information for all credit unions.

Risk alerts distribution. The Delaware League’s risk alert system is designed to communicate important, time-sensitive information. This information is disseminated through email and fax to all credit union offices and branches. Most recently, information about fraudulent checks, phishing schemes, and the compromising of the DSW Shoe Company’s customer database was featured.

Delaware League testifies on freezing credit reports. Two representatives of the Delaware Credit Union League were called to testify before the Delaware Senate Small Business Committee regarding a proposed ID theft bill that would allow a freeze on credit reports. George Fitzgerald, a member of the League’s Governmental Affairs Committee, and League president Bob Walls were asked to testify about S.B. 109, which is sponsored by Senator Robert Venables (D-Laurel) and co-sponsored by Senator David Sokola (D-Newark), a board member at DEXSTA Federal Credit Union. The bill went up for public comment on May 11. The bill is modeled after a two-year-old California law. Similar bills are being offered in more than 20 states. It would prohibit anyone from making inquiries about a person’s credit. Only the consumer could authorize a lifting of the freeze.

League thanks members of Congress for support of bankruptcy bill. On behalf of Delaware credit unions, League president Bob Walls wrote a letter of thanks to Senators Biden and Carper and Congressman Castle for their support of bankruptcy reform. In response, each of these members in Congress wrote back to the League regarding why they feel that bankruptcy reform is important. Senator Carper made the following statement, “I am grateful for your counsel on this matter and am particularly appreciative of the opinion editorial you (Bob Walls) wrote in the Delaware News Journal earlier this spring to defend our Congressional delegation’s support of bankruptcy reform.”

Update of GAC activities and Washington update. The League has distributed minutes from the recent Governmental Affairs Committee meeting, as well as a Washington update, to all credit union managers/CEOs. Please share these with other staff and boards.

Materials to help fight for CURIA. The League has sent information to all credit union managers/CEOs that can be used to lobby our members in Congress to support the Credit Union Regulatory Improvements Act (CURIA – H.R. 2517)) that was introduced May 12 [see page 1 of this newsletter]. A summary of the bill and talking points are part of the packet. When contacting Congressman Castle, credit union staff and members should explain what the credit union means to them and that credit unions are only asking to be able to serve their members better in the 21st century.

COMPLIANCE AND RESEARCH
Compliance Council focuses on key issues. Forty credit union professionals from 24 credit unions in Delaware and Pennsylvania attended the May 26 Compliance Council meeting in Lancaster. Susan Fallon of the Delaware League and individuals from three Delaware credit unions were in attendance: Delaware Alliance – Savannah Jarrell and Dawn Sutcliffe; Delaware First – Natalie Hayden, Judith Lawson, and Sharon Schaeffer; and Wilmington Postal – Susan Winward. Major topics of discussion included the Bank Secrecy Act and the new bankruptcy reform law.

New “Compliance Recap” mailed. Credit union managers/CEOs will receive the latest “Compliance Recap” in this biweekly mailing.

DELAWARE LEAGUE SERVICES
2006 discounted calendar order. Through our association with Brown & Bigelow, advertising specialty distributor, Delaware League Services is offering credit unions discounts on their 2006 calendar order if they order by June 30th.

Results of April car sale. Eleven credit unions participated in the spring League-organized car sale, which generated $533,331 in total loans. Since the program’s inception in 1992, credit unions have acquired a total of $73,851,414 in auto loans. The fall sale will be held on October 27, 28, and 29.

Quickbites and webinars. We continue to partner with the Illinois League to offer the Quickbites teleconferences. The League has also partnered with the Verisure Company to present monthly webinars on the Bank Secrecy Act, USA Patriot Act, and OFAC.

Scholarship fund. A total of $1500 was donated to the scholarship fund from contributions received during the Annual Meeting Golf Outing on April 22nd.