Compliance News

While the ultimate goal is to prevent or mitigate burdensome regulations, the reality is that regulation never stops, and therefore the need for credit unions to comply won’t either. The League remains a constant source for your credit union to understand rules and regulations that impact you.

Throughout the year, League staff research regulatory compliance questions posed by member credit unions and disseminate the answers. Educational sessions are held periodically to reinforce information distributed through InfoSight and Compblog Updates, as well as other written information.

In the News

Member Wins Security Interest Suit

An American Airlines FCU member won her suit against the financial institution for removing funds from her account to pay her credit card bill. She argued in her suit that it was a violation of the anti-offset provisions of the Massachusetts Consumer Credit Cost Disclosure Act and the federal Truth in Lending Act.

According to her complaint, plaintiff Lisa Martino had three accounts with AAFCU, one in her name only and two joint accounts with her children. She opened a credit card with AAFCU in 2007. In May 2012, AAFCU withdrew funds from all three accounts to pay off the credit card after she failed to pay it. AAFCU did not dispute that it removed the funds to pay the credit card, but claimed that Martino’s usage of the credit card was her acceptance of the agreement terms that stated AAFCU could do so if needed.

Martino argued that when she signed a pre-approval letter for the credit card, the pre-approval acceptance certificate did not indicate contain any language about security interest.  According to the ruling judge, “The agreement arrived later by mail, simultaneously with an activated, usable credit card. The agreement is the only document that mentions a security interest… More importantly, the agreement itself was not provided at the time that Martino signed the certificate, so it is impossible that Martino could have understood the full import of what she was signing.”  (

Small CU Threshold Raised to $100 Million

The NCUA Board approved a change to the Regulatory Flexibility Act that would change the definition of “small entity” to include all credit unions with fewer than $100 million in assets. The Regulatory Flexibility Act required the NCUA to determine and consider the impact of proposed and final rules on small entities, and with this change, more credit unions will be considered for regulatory relief in future rulemakings.

According to the NCUA, this means that 733 additional federally insured credit unions, and a total of 4,690 federally insured credit unions, are eligible for special consideration regulatory relief in future rulemakings.

The NCUA analyzed a range of metrics, including growth rates for assets, deposits, loans and membership, the ratio of operating costs to assets and merger and liquidation rates, when deciding on the $100 million threshold.

The NCUA raised the threshold to $50 million in 2013, with a pledge to re-examine within two years. Going forward the agency will re-examine the threshold every three years, as part of its rolling regulatory review, with the next reconsideration coming in 2018.

The rule will become effective 60 days after its publication in the Federal Register. (

Prepare Now for Escheat Reporting

Credit unions should begin preparing for the annual November 10, 2015 escheat report deadline by carrying out the following tasks:

  1. Compile a list of abandoned accounts, which refers to various types of credit union accounts abandoned for five years or more: share and share draft accounts, uncashed share drafts, dividends, etc.
  2. Try to contact these members so the accounts can be deemed active (see the special escheat mailing for more details).
  3. Advertise the existence of these abandoned accounts according to state rules by September 1.

Every Delaware CU, regardless of whether it holds unclaimed property, must file a copy of Form AP-1 (Report of Unclaimed or Abandoned Property) and Form AP-2 (Report of Unclaimed or Abandoned Property Detail Sheet), which provide a summary of the credit union’s report and which must be signed and verified by a credit union officer. These reports and remittance of monies in any such accounts are due by November 10, 2015.

Holders are permitted to file paper reports without electronic media only when the owner count being reported is 10 or less. The AP-2 form is required to be completed for all paper reports. Paper reports not accompanied by an AP-2 form will be returned. The March 1, 2015 reporting deadline was the last year paper reports were accepted. Beginning with the November 10, 2015 reporting deadline, all reports must be in electronic format. If a paper report is received, it will be rejected.

Unclaimed property forms and links to laws and regulations related to unclaimed property are available online at  The League has sent a full packet of escheat information, including those materials, to each CU CEO.

Other Requirements for the Filing:

  • A credit union must file electronically if the unclaimed property owner count is greater than 10.
  • Where the expense of a newspaper advertisement exceeds 50% of the reported value, a publication waiver may be requested by submitting a waiver request form. This form was part of the escheat packet sent out by the League. Or go to:
  • Remember, amounts in excess of $25 must be reported to the state of the member’s last known address. You will need to contact each applicable state to obtain the correct filing forms, deadlines and dormancy periods (which vary from state to state).

The League’s July escheat mailing included contact information for other states, report requirements, and sample letters for members prior to your September 1st publication deadline. Call or email Carole Langiu ( if you have further questions.

CUs May Disclose Breached Merchant Names

MasterCard and Visa have confirmed that, under their network rules, card issuers are allowed to divulge the names of merchants involved in data breaches to their members. This provides the issuers a significant opportunity to mitigate some of the reputational damage that often occurs with breach-related card reissuance.

Both Visa and MasterCard said that, when a data breach is publicly confirmed, their rules do not prohibit card issuers from sharing the information with their cardholders. However, both also cautioned about “disseminating inaccurate information” before public confirmation of a data breach. Additionally, lawmakers could request keeping merchant’s names confidential to aid in their investigations. (

TRID Rule Delayed until Oct. 1

There will be a delay of the effective date of the CFPB’s Know Before You Owe rule, which includes the Truth-in-Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) regulation. CFPB Director Richard Cordray announced that the rule will now go into effect Oct. 1, rather than the fast-approaching original Aug. 1 date.

In the CFPB announcement on delaying implementation, Cordray said, “We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks.”

CUNA said it is grateful for the announced delay, but still strongly recommends the longer safe harbor period to the end of the year. CUNA is analyzing the CFPB announcement to assess its full impact on credit unions. (

60 Days to Respond to Consumer Complaint

Credit unions have 60 days to respond to consumer complaints before the National Credit Union Administration’s Consumer Assistance Center (CAC) gets involved, the agency said in a recent Letter to Credit Unions (15-CU-04).

The letter was sent to federally insured credit unions to describe recent agency changes intended to streamline and improve its consumer complaint handling process.The complaint process involves two separate phases: attempted resolution by the credit union and CAC investigation.

In the initial phase, the CAC will assign a case number and forward the complaint to the credit union’s CEO and to the chair of the credit union’s supervisory committee. The committee will have the opportunity to review and, if appropriate, attempt resolution of the matter within 60 calendar days of the date of the forwarded letter.

If the CAC is notified within 60 days that the matter is resolved, the case will be closed. The CAC will begin a formal investigation if no written response is given, the credit union indicates that it cannot resolve the matter or the consumer disputes the resolution.  (

Final Diversity Standards for CUs Issued

The NCUA and federal banking regulators Tuesday issued their final interagency policy statement establishing joint standards for assessing diversity policies and practices of the institutions they regulate.

Required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the statement applies to those regulated by NCUA, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.

The final standards are similar to the proposed standards and provide a framework for regulated entities to create and strengthen their diversity policies and practices, the agencies said. These include their organizational commitment to diversity, workforce and employment practices, procurement and business practices, and practices promoting transparency of organizational diversity and inclusion within the entities’ U.S. operations.

The agencies’ assessments of regulated entities’ diversity policies will not be a part of the examination or supervisory process. Instead, they will rely on a “model assessment” that would include a self-assessment by the entity. Financial institutions’ self-assessment would use the proposed standards, voluntary disclosure of their assessment to the regulator, and publication of their diversity efforts to increase public awareness and understanding.

Standards may be tailored and used in a manner reflective of the institution’s size and other characteristics. “The agencies recognize that each entity is unique with respect to characteristics such as its size, location, and structure,” the policy said.

CUNA, together with its Examination and Supervision Subcommittee, will be analyzing the joint final standard in detail and is willing to work with credit unions that experience examiner-related issues with their self-assessments.  (

CFPB Issues Fair Lending Guidance

New guidance recently issued by the Consumer Financial Protection Bureau (CFPB) is designed to help lenders avoid illegal discrimination against consumers receiving public housing assistance. According to the bureau, the guidance was issued to ensure non-discriminatory access to credit for applicants whose income includes vouchers from the Section 8 Housing Choice Voucher (HCV) Homeownership Program.

The bulletin also recommends that lenders clearly articulate underwriting policies regarding income derived from public assistance programs. This includes training of underwriters, mortgage loan originators and other involved in the origination process, as well as careful monitoring for compliance to such policies.   (

Mortgage-shopping Toolkit Available from CFPB

A new mortgage-shopping toolkit that includes forms that will be required starting Aug. 1 has been released by the Consumer Financial Protection Bureau (CFPB).

Creditors must provide the toolkit to mortgage applicants as a part of the application process, and the CFPB encourages other industry participants, including real estate professionals, to provide it to potential homebuyers.  The new toolkit is designed to replace an existing one that creditors are currently required to provide to mortgage applicants.

The bureau’s new Truth-in-Lending Act-Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosure rule includes new Loan Estimate and Closing Disclosure forms that lenders must provide starting Aug. 1. According to the CFPB, the new toolkit provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what affordable means to them and find their best mortgage.

The CFPB says the release of the toolkit now is intended to give the mortgage industry time to order and receive or print the new toolkit and integrate electronic versions into their mortgage origination systems.   (CUNA News Now) 

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