NCUA Says CU Counsels Can Perform Third-Party Reviews
WASHINGTON -- In-house counsels at credit unions can review contracts with third parties as long as they have no connections to the outside organization, according to an NCUA legal opinion.
The in-house counsel will focus on protecting the interest of the credit union and will have the independence recommended by previously issued regulations, General Counsel Robert M. Fenner wrote in an April 18 response to an inquiry from Faith L..Anderson, the vice president and general counsel of the American Airlines Federal Credit Union in Ft. Worth, Texas.
An opinion issued by the agency last December caused some confusion about whether the person reviewing the contracts had to be someone not employed by the credit union.
The administration also issued a two-and-a-half-page list of questions that its inspectors will use when evaluating the propriety of credit unions' agreements with third parties. The inspectors will focus on whether these arrangements adequately deal with issues of risk assessment and planning, effective due diligence as well as risk measurement, monitoring and control.
Inspectors will inquire about everything from whether the credit union is tracking and identifying the cash flows of the third party to whether the method of communication ensures that member data is protected.
The questionnaire was sent to every credit union and has also been posted on the agencies web site: www.ncua.gov.