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NCUA Letter Details CUSO Rule, Compliance Tips
ALEXANDRIA, Va. (11/26/13)--An outline of the National Credit Union Administration's final rule on credit union service organization (CUSO) supervision, and compliance tips for credit unions, are provided in a new agency letter to credit unions (13-CU-13).

The CUSO rule, which was approved at the November NCUA open board meeting, will require CUSOs and their subsidiaries to directly file their financial statements with the NCUA and to forward those reports to state supervisors. The rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.

The final rule will become effective on June 30. A registry for CUSOs to file their documents with the NCUA will be finalized in late 2015.

While the unique collaborative business model of CUSOs fosters cooperation and shared innovation for credit unions, allowing them to achieve economies of scale, retain expertise, and better serve their members, CUSOs can also pose potentially widespread financial and operational risks to credit unions and the National Credit Union Share Insurance Fund, the NCUA noted in the letter.

"Without these changes to the CUSO regulations, NCUA cannot fully determine the financial condition of CUSOs, the full range of services offered by each CUSO, an accurate number of CUSOs in operation, or the relationship between a specific CUSO and a specific credit union," the agency explained.

The letter also contains details on the agency's developing CUSO registry, CUSO accounting tips, and information on how the agency rule will address less than adequately capitalized federally insured, state-chartered credit unions.

NCUA Chairman Debbie Matz in the letter recommended that credit unions that have or plan to make a loan to or investment in a CUSO familiarize themselves with the requirements of the final regulations, and contact their regional office or state supervisory authority if there are further questions.

For the full letter to credit unions, use the resource link.
Other Resources

NCUA Release
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