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Washington
Prohibited persons rule effective Sept. 18
WASHINGTON (8/27/08)—September 18 is the effective date of new National Credit Union Administration (NCUA) guidance regarding provisions in the Federal Credit Union Act (Act) that prohibit persons convicted of certain criminal offenses from participating in the affairs of the credit union. Absent prior written consent from the NCUA Board, the Act prohibits persons convicted of a criminal offense involving dishonesty or breach of trust, or who have entered into a pretrial diversion or similar program, from participating in the affairs of the credit union. The agency’s new Interpretive Ruling and Policy Statement (IRPS) excludes certain minor offenses, juvenile offenses, and expunged convictions, while also prohibiting NCUA from providing consent to those individuals who have engaged in certain other criminal offenses. The IRPS establishes the procedures that credit unions must follow if they are seeking the required NCUA consent. Under these procedures, a credit union must explain circumstances surrounding a conviction or pretrial diversion program and demonstrate that the individual is fit to participate in the affairs of the credit union without posing a safety and soundness risk or impairing the public confidence in the credit union. The guidance also places the burden on the credit union to prove that the NCUA Board should grant the requested consent. It sets forth the factors that the NCUA Board will consider when reviewing these requests, which include the nature of the offense, evidence of rehabilitation, the position that the individual held at the credit union and the nature of those responsibilities, the ability of the credit union to supervise the individual, the credit union's fidelity bond coverage, the position of the state regulator if the credit union is state-chartered, and any other factors that may be relevant. For more details, use the resource link below to access the Federal Register document on the IRPS.
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