Compliance: NCUA’s fidelity bonds rule effective Oct. 22
NCUA finalized changes to its fidelity bonds rule in July, and the changes go into effect Oct. 22. The Federal Credit Union Act requires that certain credit union employees and elected officials have fidelity bond coverage.
A recent CUNA CompBlog entry goes into 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.
- 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; and
- Establishes a sunset date for NCUA-approved bond forms.
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.
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.
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.
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.
Additional details can be found in the CompBlog entry.