WASHINGTON—What does the new fidelity bond rule mean for credit unions?
The rule was passed by NCUA in July and goes into effect Oct. 22. Now, CUNA has offered a more detailed explanation of the rule as part of its analysis, available in the file sharing library on the trade group’s Compliance Community.
The Federal Credit Union Act requires that certain credit union employees and elected officials have fidelity bond coverage.
CUNA explains what the rule means for credit unions:
The rule:
- Expands credit union board of director oversight of fidelity bond coverage
- Extends the discovery periods after both a voluntary and involuntary liquidation
- Allows for bond coverage of certain credit union service organizations
- Amends which type of bond forms will require NCUA board approval
- Establishes a sunset date for NCUA-approved bond forms
A Reminder
CUNA reminded the board of directors of a credit union is responsible for annually reviewing all applications for the purchase or renewal of coverage to ensure that there is adequate coverage. The board approval of the purchase and renewal of coverage should be documented in the form of a board resolution in the board meeting minutes, CUNA explained.
“The standard industry practice of employees signing renewal documents is no longer acceptable after Oct. 22, instead any renewals must be signed by a non-employee and one that is different from the signatory that signed the prior renewal,” CUNA said.
Credit unions can use the basic bond forms on NCUA’s website without further NCUA approval. However, if a credit union wishes to use a form that is not on the list it will need to obtain NCUA’s approval prior to using the form, CUNA said.
Also Needed
The NCUA Board will also need to approve any bond form that has been amended or changed.
The changes for coverage of the fidelity bond apply to corporate credit unions as well and are generally the same as those for natural person federally insured credit unions, CUNA noted.
WASHINGTON—What does the new fidelity bond rule mean for credit unions?
The rule was passed by NCUA in July and goes into effect Oct. 22. Now, CUNA has offered a more detailed explanation of what the rule means for credit unions as part of its analysis, available in the file sharing library on the trade group’s Compliance Community.
The Federal Credit Union Act requires that certain credit union employees and elected officials have fidelity bond coverage.
CUNA explains what the rule means for credit unions, and CUNA’s final rule analysis is available from the file sharing library on CUNA’s Compliance Community.
The rule:
- Expands credit union board of director oversight of fidelity bond coverage
- Extends the discovery periods after both a voluntary and involuntary liquidation
- Allows for bond coverage of certain credit union service organizations
- Amends which type of bond forms will require NCUA board approval
- Establishes a sunset date for NCUA-approved bond forms
A Reminder
CUNA reminded the board of directors of a credit union is responsible for annually reviewing all applications for the purchase or renewal of coverage to ensure that there is adequate coverage. The board approval of the purchase and renewal of coverage should be documented in the form of a board resolution in the board meeting minutes, CUNA explained.
“The standard industry practice of employees signing renewal documents is no longer acceptable after Oct. 22, instead any renewals must be signed by a non-employee and one that is different from the signatory that signed the prior renewal,” CUNA said.
Credit unions can use the basic bond forms on NCUA’s website without further NCUA approval. However, if a credit union wishes to use a form that is not on the list it will need to obtain NCUA’s approval prior to using the form, CUNA said.
Also Needed
The NCUA Board will also need to approve any bond form that has been amended or changed.
The changes for coverage of the fidelity bond apply to corporate credit unions as well and are generally the same as those for natural person federally insured credit unions, CUNA noted.