Regulatory Alerts2018-09-05 | I-18-02I-18-02 — Verification of Members' Accounts
The Washington Department of Financial Institutions issued Interpretive Letter I-18-02 to clarify that state-chartered credit unions are not required to verify member accounts annually. The regulator determined that the 2017 amendment to RCW 31.12.335(1)(c) was not intended to impose stricter standards than federal deposit insurance requirements. Consequently, credit unions must perform account verifications at least once every two years in compliance with 12 CFR §§ 741.202(b) and 715.8(a).
State of Washington DEPARTMENT OF FINANCIAL INSTITUTIONS DIVISION OF CREDIT UNIONS P.O. Box 41200 Olympia, Washington 98504-1200 Courier Address: 150 Israel Rd. SW Tumwater, WA 98501-6456 Telephone (360) 902-8701 TDD (360) 664-8126 (800) 372-8303 FAX (877) 330-6870 http://www.dfi.wa.gov September 5, 2018
Division of Credit Unions Interpretive Letter I-18-02 TO: CEOs of Washington State Chartered Credit Unions FROM: Linda Jekel, Director of Division of Credit Unions RE: Clarifying how often a verification of member accounts is required to be performed in compliance with RCW 31.12.335(1)(c) and 12 CFR §§ 741.202 (b) and 715.8 (a) Question RCW 31.12.335 (1)(c) requires a credit union to complete an annual audit of the credit union and verification of its members’ accounts. Federal deposit insurance requirements in 12 CFR §§ 741.202 (b) and 12 CFR 715.8 (a) requires a verification of members’ accounts to be performed at least once every two years. Is a credit union required to complete a verification of its members’ accounts annually or at least once every two years? Background When the Washington Credit Union Act was amended in 2017, it was not intended to create a stricter standard for verification of members’ accounts than the federal deposit requirements. The word “annual” was intended to apply only to the audit itself and not the requirement of a verification of members’ accounts. All Washington state chartered credit unions must have federal deposit insurance from the National Credit Union Administration (NCUA) (see RCW 31.12.408), and therefore, they must adhere to the NCUA insurance requirements under 12 CFR 741.202 as it pertains to 12 CFR 715.8(a), which reads, “The Supervisory Committee shall at least every two years, cause the passbooks (including any book, statements of account, or other record approved by the NCUA Board) and accounts of the members to verified against the records of the treasurer of the credit union.”.
Washington State Chartered Credit Unions Interpretation Letter I-18-02 Page 2 of 2 Conclusion The wording in the 2017 amendment to RCW 31.12.335(1)(c) is confusing and was not intended to require an annual verification of members’ accounts. In compliance with 12 CFR §§ 741.202 (b) and 12 CFR 715.8 (a), Washington state chartered credit unions must only perform a verification of members’ accounts at least once every two years. Division of Credit Union examiners will accept a verification of members’ accounts completed at least once every two years and will not require an annual verification. This Interpretive Letter is applicable to all Washington state-chartered credit unions. If you have any questions, please do not hesitate to contact Linda Jekel, Director of Credit Unions, at linda.jekel@dfi.wa.gov, or (360) 902-8778. Disclaimer: The Division of Credit Unions does not provide legal advice. This interpretation is based on the facts as presented to Division of Credit Union, provided as general guidance only, and is not a substitute for legal advice to the credit union.