Compliance Blog

Posted by Sarah Zimmermann

I don't know about you guys but I walked into work yesterday morning completely oblivious to the fact that I was going to have a frustrating morning bumbling my way though NCUA's new website. I'm sure I'll get used to it but I did grumble a bit yesterday morning, I'm not going to lie.

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NAFCU members, the November Compliance Newsletter is available. Last week at Seminar, many of you reminded us how much you love Q&As, so we figured we'd give you all a freebie this morning from this month's newsletter.

Question: I’ve read NCUA Letter to Credit Unions 11-CU-15 on changes to sales of Savings Bonds. The letter states “Please continue redeeming these paper bonds on behalf of your members.” We were always under the impression that, as a paying agent, we were required to redeem bonds for both members and nonmembers. Has this requirement been changed? Do we need to continue redeeming bonds for nonmembers?

Answer: Yes, if the credit union continues to be a paying agent – it must redeem savings bonds for both members and nonmembers. This requirement comes from 31 C.F.R. 321.10:

Ҥ 321.10 Responsibilities of paying agents.
(a) Payment of securities. A paying agent is required to redeem eligible securities during its regular business hours for any presenter, whether or not a customer, who can establish his or her identity as the owner or co-owner named on the securities, in accordance with the provisions of this part, and the appendix to this part, and the Treasury Identification Guide for Cashing United States Savings Bonds. An agent is encouraged, but is not required, to redeem eligible securities during its regular business hours for a surviving beneficiary, a legal representative designated in the registration of securities presented, or a legal representative of the last deceased registrant's estate who can provide acceptable evidence (See §321.7 (d) or (f)) and establish identity in accordance with this part.”

NCUA discussed the ability of credit unions to cash Savings Bonds for nonmembers in Legal Opinion Letter 01-0226. While Letter 01-0226 answers another question, NCUA includes this language regarding cashing Savings Bonds for nonmembers:

“In order for an FCU to be a U.S. savings bond paying agent and provide this service to its members, an FCU must also provide the service to nonmembers. An FCU is permitted to cash U.S. savings bonds for nonmembers because it is incidental to the FCU providing a service to its members.”

Thus, the upcoming change by the U.S. Treasury to require purchases of Savings Bonds directly from www.treasurydirect.gov will not change a credit union’s requirement to redeem Savings Bonds for nonmembers if it continues to act as a paying agent.

 

Editor's Note: Normally, we like to provide links to the documents we are discussing. Alas, the fancy new website was not cooperating with us at publication time. We will fix this when we get a chance.

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NAFCU is hosting a BSA Webinar today from 2-3:30 pm EDT, featuring Jeffrey Pratt, Deputy Assistant Director at FinCEN. Below is a summary of what will be covered.

    * BSA issues unique to credit unions;
    * New developments related to BSA compliance issues;
    * Problems that FinCEN is seeing within financial institutions; and
    * Updates on BSA to include E-Filing

If you'd like to register for this webcast, folllow the link above for all the details.