Compliance Blog

During yesterday's NCUA Board meeting, the Board issued a proposed Interpretive Ruling and Policy Statement (IRPS) on certain prohibitions imposed by Section 205(d) of the Federal Credit Union Act.   This is the portion of the FCU Act that prohibits FCUs from hiring or being affiliated with a person who has been or "legally connected" with prosecution of a criminal offense involving dishonesty or trust.  You can access the 23-page proposal here. 

In NCUA's words:

The NCUA Board issued proposed Interpretive Ruling and Policy Statement (IRPS) No. 08-1, Guidance Regarding Prohibitions Imposed by Section 205(d) of the Federal Credit Union Act. The proposed IRPS does not add regulatory burden; rather, it is being issued to clarify and provide guidance to credit unions and affected individuals concerning an existing statutory prohibition within the Federal Credit Union Act.

Section 205(d) of the Federal Credit Union Act prohibits a person who has been convicted or legally connected with prosecution of a criminal offense involving dishonesty or breach of trust from working or being affiliated with an insured credit union, except with prior written consent from the NCUA Board. NCUA has not previously published policies or regulations concerning Section 205(d) and recently became aware of several employees working at credit unions in violation of this prohibition. (Emphasis added.)

As I've stated before, NCUA does not issue guidance for the sake of looking busy.  As highlighted above, NCUA has become aware that credit unions have violated this requirement.  While this is a proposed IRPS, and we'd love for you to read it and give us your feedback, it is important to remember that the requirements outlined in the proposal are already statutory requirements.  With that being said, it is important that your HR team and volunteer recruiters are aware of these requirements.  It would be a good idea for them to read this proposal to gain their feedback as well.