Does your credit union have compliance questions? If so, the New York Credit Union Association’s compliance department is here to help.

Year to date, the Association’s compliance department has fielded more than 3,800 queries, according to Sarah Hodgens, the Association’s director of compliance, who compiled a list of some of the recent, recurring questions that credit unions have asked about – both COVID-19- and non-COVID 19-related.

The Association also created a networking group designed to support credit union compliance staff with building a network of compliance colleagues. When logged into the Association’s website, users will be connected with other credit union compliance staff across New York state. The compliance networking group can be accessed by clicking here.

The following are some recurring compliance questions from credit unions, and corresponding answers:

Q: Can our credit union’s annual meeting be held virtually due to COVID-19?

A: Yes, it is permissible to hold annual meetings virtually due to COVID-19. The NCUA has issued a letter regarding annual meeting flexibility for further guidance.

Q:  In regards to a deceased member’s account, who do the funds belong to if the designated beneficiary passes away before the member?

A: The funds belong to the estate of the deceased member. New York State’s Estates Powers and Trusts Law provides the following:

§ 7-5.2 Terms of a trust account

The funds in a trust account, which shall include any dividends or interest thereon, shall be trust funds subject to the following terms:

(3)  If  the  depositor  survives  the  beneficiary,  the  trust shall terminate and title to the funds shall continue in  the  depositor  free and clear of the trust.

Q: Can a member’s accounts be linked for the purpose of determining an active/inactive status as it relates to escheatment?

A: Based on the below excerpt from the Comptroller’s handbook, the practice of linking of accounts is permissible.

Linkage of Accounts

For instances in which a reporting organization has the ability to link several accounts of a single customer either manually or electronically, it is our opinion that you may treat an exclusionary action on one of the customer’s accounts as an exclusionary activity for all of the customer’s accounts, including those that are inactive or dormant. However, you should notify the customer of any dormant accounts and instruct him/her to reactivate the account.

Examples of such accounts are savings, checking, IRA, personal trust, loan payment, mutual fund within the same fund group and brokerage, etc. In the absence of an exclusionary activity, a related inactive account should not delay the reporting of a dormant account.

Q: Can my credit union post ACH payments based on account number only?

A: NACHA rules require that a Receiving Depository Financial Institution verify the account number presented in the ACH file matches the account number being credited. If the account number matches it can be accepted into the account. However, if the credit union’s policy prohibits deposits in the name of others into an account, the business decision can be made to return those items.

Q: What is the difference between a durable and a non-durable power of attorney? How can my credit union tell the difference when we receive a power of attorney document?

A: If a power of attorney is durable, that means the power of attorney stays in effect if the principal becomes incapacitated. If a power of attorney is non-durable, that means the power of attorney is terminated if the principal becomes incapacitated.

A power of attorney is considered durable unless it states that it is non-durable. New York State General Obligations Law § 5-1501A provides the following:

1. A power of   attorney is durable unless it expressly provides that it is terminated by the incapacity of the principal.

2. The subsequent incapacity  of  a  principal  shall  not  revoke  or  terminate  the  authority  of an agent who acts under a durable power of  attorney. All acts done during any period of the principal’s  incapacity  by  an agent pursuant to a durable power of attorney shall have the same effect and inure to the benefit of and bind a principal and his  or  her  distributees, devisees, legatees and personal representatives as if such  principal  had  capacity. If a guardian is thereafter appointed for such principal, such agent, during the continuance of the appointment, shall account to the guardian rather than to such principal.