Compliance Blog

Hey NAFCU members: NAFCU's Book of Answers has been updated.  It is now 120 pages in length.  Members can access it here. (Log-in needed.)

For you non-NAFCUers, here's a taste of what you are missing:

Question:  We have been told by our auditor that we should not be placing a copy of our member’s driver’s licenses in their loan file. I thought we could keep copies of documents for Customer Identification Program (CIP) purposes. Can you clarify?

Answer:  Yes, the frequently asked questions (FAQs) on the CIP rule indicates that credit unions can keep a copy of documents used for CIP but “should be mindful that it must not improperly use any document containing a picture of an individual, such as a driver’s license, in connection with any aspect of a credit transaction.” See Question 2 under “Required Records” in NCUA Regulatory Alert 04-RA-04 (February 2004). While having a copy of a driver’s license in a loan file is not automatically seen as discriminatory, it is not a recommended practice. Credit unions are not required to have a copy of the driver’s license but may do so. Storing this photo in the loan file could raise Regulation B concerns as regulators could argue the photo was a prohibited basis for a loan decision because it was in the loan files. If the credit union feels it needs a copy of the driver’s license for CIP reasons, it should be certain internal controls are established so that the copy is not intermingled with loan files. October 2008

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Yesterday, the Fed announced that it will change the rate it is paying on excess reserves.  Read all about it here.

Previously, the rate on excess balances had been set as the lowest federal funds rate target established by the Federal Open Market Committee (FOMC) in effect during the reserve maintenance period minus 75 basis points.  Under the new formula, the rate on excess balances will be set equal to the lowest FOMC target rate in effect during the reserve maintenance period less 35 basis points.  This change will become effective for the maintenance periods beginning Thursday, October 23.