Q: In onboarding an employee that is already registered with the NMLS, does the credit union have to perform a credit check on them, or does their registration get transferred?
A: The SAFE Act does not mandate credit checks at all; this often gets confused with the Regulation Z requirement to obtain such reports for certain employees not required to be licensed with the NMLS. As long as the employee’s registration is current on the day they are covered by the SAFE Act, the credit union must perform the following:
Source: Regulation G, 12 CFR 1007.103
Q: We have a member attempting to deposit an item payable to “Mr. and Mrs. Smith”. The person presenting the check for deposit asserts that they identify as both, and can endorse the item as both parties. Is this acceptable?
A: Whether or not this is acceptable depends on the credit union’s internal check processing procedures. If the individual is determined to have provided sufficient identification as both payees, then this would likely be acceptable; on the other hand, these may not allow the credit union to accept the item, and instead advise the member that they should have the check reissued to one payee. From a risk aversion standpoint, the credit union should consider requiring the check be reissued.
Q: Someone came in wanting to open an estate account for someone who was not our member. The estate administrator is a current member; how do we determine membership eligibility for an estate account?
A: It is the NCUA’s position that, for estate accounts, the conditions are the same as those for the establishment of an irrevocable trust account. When shares are issued in an irrevocable trust, either the settlor or the beneficiary must be a member of the credit union. Due to this, the membership of the administrator is immaterial. For an estate account, either the decedent (taking the role of settlor) or the beneficiary (and all beneficiaries, if multiple) must be members of the credit union. In this case, if all beneficiaries join the credit union, then the account would be considered eligible for membership and may be legally opened at the credit union.
Source: NCUA Legal Opinion 92-0434 “Decedent’s Estate Account”
For more information, email Heather Line.
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