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CU Compliance Connection

CU Compliance Connection. CUSO Rule. CUSO Rule. The NCUA amended the CUSO regulation to increase transparency and address safety and soundness concerns for the credit union industry. . CUSO Rule.

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CU Compliance Connection

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  1. CU Compliance Connection CUSO Rule

  2. CUSO Rule The NCUA amended the CUSO regulation to increase transparency and address safety and soundness concerns for the credit union industry.

  3. CUSO Rule Prior to investing in a CUSO, credit unions must obtain written legal advice as to whether the CUSO is established in a manner that will limit potential exposure of the credit union to no more than the loss of funds invested in, or loaned to, the CUSO.

  4. CUSO Rule • Written agreement with CUSO to: • Account in accordance with GAAP; • Obtain audited financial statements; Provide NCUA with any books and records of the CUSO; and • Annually submit a report to NCUA.

  5. CUSO Rule • Complex CUSO Reporting must include: • A list of services provided • The investment amount, loan amount, or level of activity of each credit union; • The CUSO’s most recent year-end audited financial statements; and • The total dollar amount and number of loans outstanding and granted year-to-date.

  6. CUSO Rule Credit unions may only invest in or loan to a CUSO which has a subsidiary CUSO, if the subsidiary CUSO complies with all applicable state laws and rules regarding CUSOs; and all current and amended requirements to the CUSO Regulation.

  7. CUSO Rule A credit union and a CUSO must be operated in a manner that demonstrates to the public the separate corporate existence of the credit union and the CUSO.

  8. CUSO Rule • Credit union – CUSO operation: • Business transactions, accounts, and records are not intermingled; • Each observes separate corporate procedures; • Each is adequately financed separately; • Each is publically a separate enterprise; • The FICU does not dominate the CUSO; and • Unless the FICU has guaranteed a loan obtained by the CUSO, all borrowings by the CUSO indicate that the FICU is not liable.

  9. CUSO Rule If a Federal Credit Union is less than adequately capitalized or would be rendered less than adequately capitalized by the recapitalization of the CUSO must obtain prior written approval from the appropriate NCUA regional office before investing in the CUSO.

  10. CUSO Rule This rule is effective June 30, 2014. CUSOs will begin submitting reports to NCUA under the new requirements when the reporting system is fully operational, which will be by December 31, 2015.

  11. Thank you for joining me for this review of the CUSO Rule. Shawn Wolbert, CIA, CUCE Director CU System Relations 101 S. Washington Square, Suite 900 Lansing, MI 48933-1703 (800) 262-6285 Ext. 486 (734) 658-5427 Mobile Follow me on Twitter – Shawn Wolbert @ Go2CUGuru

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