NCUA Finalizes CUSO Rule 

The NCUA has finalized a regulation related to credit union service organizations. The regulatory changes will become effective June 30, 2014. To help credit unions understand their requirements as a result of this final rule, the NCUA has issued a Letter to Credit Unions (13-CU-13).

Within the NCUA letter, the following table was provided to summarize the primary changes to the rule:

  Rule Element Credit Union Action
(Required by
June 30, 2014)
New for all Credit Unions

CUSO Subsidiaries – clarifies applicability of the regulations to CUSO subsidiaries.

None

New for all Credit Unions

CUSO Registry – requires credit unions to ensure that the CUSOs with which they do business agree to provide certain information directly to NCUA and the state supervisory authority, as applicable, on an annual basis.

Amend written agreement between credit union and CUSO

New for all Federally Insured, State-Chartered Credit Unions* CUSO Accounting – requires credit unions to ensure that the CUSOs with which they do business agree to comply with generally accepted accounting principles and obtain a financial statement audit.

Amend written agreement between credit union and CUSO

New for all Federally Insured, State-Chartered Credit Unions* Less than Adequately Capitalized Federally Insured, State-Chartered Credit Unions – added preapproval process for federally insured, state-chartered credit unions that are, or would be rendered, less than adequately capitalized by an additional investment in a CUSO. None

* These provisions previously only applied to federal credit unions.

As a result of this final rule, federally insured credit unions will be required to obtain a written agreement from a CUSO, prior to investing in or lending to the CUSO, that it will provide information to the NCUA and the state supervisory authority on an annual basis. According the NCUA letter, the CUSO will have to agree that it will account for all transactions in accordance with generally accepted accounting principles; prepare quarterly financial statements, and obtain an annual financial statement audit of financial statements by a licensed certified public accountant in accordance with GAAP.

This final rule also establishes a limit on additional investments in a CUSO by a federally insured, state-chartered credit union that is, or would be considered, less than adequately capitalized. Credit unions in this situation will be required to obtain prior written approval from their state supervisory authority and notify the NCUA regional director if the aggregate cash outlay exceeds the investment limit in the state in which the credit union is chartered, according to the NCUA letter.


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