Service to members is the hallmark of credit unions. Credit unions have a tremendous opportunity to serve the fastest growing minority demographic in the United States--Latinos. However, credit unions attempting to serve this demographic may not be familiar with some of the considerations to help offer such service.
NCUA has issued guidance in this area, including key operational issues, such as customer identification program requirements; supervisory contacts by NCUA upon receipt of a complaint; wire and other electronic services to nonmembers within a credit union's field of membership; and NCUSIF deposit insurance.
Section 326 of the USA Patriot Act requires credit unions to implement a written CIP. The CIP, incorporated into a credit union's Bank Secrecy Act and Anti-Money Laundering Program, is intended to enable credit unions to form a reasonable belief of the true identity of each member. The CIP must include procedures specifying information that will be obtained from each member, which must include at a minimum name, date of birth, address and an identification number. An identification number for a U.S. citizen can be a taxpayer identification number; for a non-citizen, it can be a TIN, passport number and country of issuance; an alien identification card number; or a number and country of issuance of any other unexpired government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.
A credit union's CIP also needs to include procedures for verifying customer identity. These procedures must describe use of documents, nondocumentary methods or a combination of both to verify the customer's identity. A credit union using documents to verify a customer's identity must have procedures that set forth the minimum acceptable documentation, as described in the CIP rule. To verify an individual's identity, a credit union may accept unexpired government-issued identification evidencing nationality or residence (for example, the Mexican Matr?-cula Consular card) and bearing a photograph or similar safeguard, such as a driver's license or passport.
Further information on the subject is available at www.ncua.gov and in the FFIEC BSA/AML Examination Manual, also available at NCUA's Web site under "Credit Union Resources--Bank Secrecy Act."
Assume a credit union recently opened a branch in a primarily Latino area. The credit union is beginning to successfully reach out to the community when NCUA receives a complaint that the credit union is "breaking the law" by serving "illegal aliens." What is NCUA's standard operating procedure in this situation and when can the credit union expect that NCUA will conduct a supervisory contact based upon the complaint?
NCUA's standard operating procedure is to send member and other complaints to a credit union's supervisory committee. A supervisory contact would be pursued if the issue raised in the complaint is linked to issues raised during the previous exam or the issue is high profile in that it may create high reputation or financial risk to the credit union. Examples of the latter include fraud, insider dealing, field of membership or Office of Foreign Assets Control violations. Additionally, if the complainant has significant documentation, NCUA would pursue it.
In such instances, NCUA may conduct a supervisory contact to respond to the person who issued the complaint. Under no circumstances would such supervisory contact be intended to create reluctance for credit unions to serve Latino and other populations. In fact, NCUA encourages credit unions to reach out to and serve all segments of their fields of membership.
NCUA's rules state that federally chartered credit unions may provide certain services to persons within their fields of membership, regardless of membership status. So if a person is a nonmember but within the FCU's field of membership, the FCU can sell negotiable checks, including travelers' checks, money orders and other money transfer instruments; and cash checks and money orders and receive international and domestic electronic fund transfers for a fee.
This regulation affords FCUs the chance to expand outreach to those who need these specific payment services. Credit unions need to remember that they must comply with the specific recordkeeping and reporting requirements of the Bank Secrecy Act for these nonmember transactions. The specific recordkeeping requirements are detailed in the FFIEC BSA/AML Examination Manual.
In addition, Section 314(a) of the USA Patriot Act requires credit unions to conduct one-time searches of records to identify accounts or transactions of a named suspect. Unless otherwise instructed by an information request, credit unions must search their records for transactions conducted outside of an account by or on behalf of a named suspect during the preceding six months. Credit unions must ensure their procedures include searching these transactions, as appropriate, upon receipt of the 314(a) requests.
In September 2006, the NCUA Board issued a final rule change on share insurance coverage for federally insured credit unions. Two of the key changes to the final rule include defining the "standard maximum share insurance amount" as $100,000 and requiring NCUA and FDIC to consider if an inflation adjustment is appropriate beginning in 2010 and in subsequent five-year periods; and increasing the share insurance limit for IRA and Keogh retirement accounts from $100,000 to $250,000, subject to the same inflation adjustments.
NCUA is working to translate the "Your Insured Funds" and "How Your Accounts Are Insured" brochures describing revised insurance limits into Spanish. Federally insured credit unions will then have a resource to explain federal deposit insurance to Spanish speaking segments of their fields of membership.
The opportunity to serve all segments of a credit union's field of membership is here and now. Hopefully, the resources cited above should facilitate and enhance credit union's understanding and ability to serve these consumers.