Editor's Note: NAFCU follows the Federal Government's operating schedule. Due to an ice storm, Los Federales are under a "2 hours delay." NAFCU will do the same, opening at 11 a.m. (EST) today.
Posted by Anthony Demangone
Many credit unions are rethinking how they do their business and who they do their business with. Many credit unions have found out that a credit union service organization, or CUSO, might be just the thing. CUSOs can be a great way to better serve a credit union's membership, either as a business partner or the credit union's affiliate.
We've had so many questions about CUSOs recently that I wanted to highlight NCUA expectations regarding CUSOs and the need for a separate corporate identity. In short, when a credit union establishes a CUSO, it must be done in a way that ensures the CUSO is a legally separate entity. NCUA's CUSO rule discusses this issue at 12 C.F.R. Part 712.4. Here are a few snippets:
- The credit union and CUSO must be held out to the public as a separate enterprise.
- The federal credit union may not dominate the CUSO to the extent that the CUSO is no more than a department of the credit union.
- In addition, before a credit union may invest in a CUSO, the federal credit union must obtain written legal advice as to whether the CUSO is structured in a way that preserves legal separateness.
The section isn't that long, so if your credit union is interested in establishing or investing in a CUSO, it is well worth a read.